<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1994.
SECURITIES ACT FILE NO. 33-58610
INVESTMENT COMPANY ACT FILE NO. 811-7524
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 2 /X/
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 2 /X/
(check appropriate box or boxes)
------------------------
GREENWICH STREET MUNICIPAL
FUND INC.
(formerly, Municipal Opportunity Fund Inc.)
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048
(Address of Principal Executive Offices) (zip code)
Registrant's Telephone Number, including Area Code: (212) 298-7315
MR. HEATH B. McLENDON
Smith Barney Shearson Inc.
Two World Trade Center, 100th Floor
New York, New York 10048
(Name and Address of Agent for Service of Process)
------------------------
COPY TO:
JON S. RAND, ESQ,
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form N-2 are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
------------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF OFFERING AMOUNT MAXIMUM MAXIMUM
SECURITIES BEING BEING OFFERING PRICE AMOUNT OF REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Common Stock, par value 5,750,000
$.001 per share........ shares $12.00 $69,000,000 $22,562.50(3)
<FN>
(1) Includes 750,000 shares of Common Stock which the Underwriters may purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The total amount of the registration fee has been previously paid with the
filing of the initial Registration Statement on February 19, 1993.
</TABLE>
------------------------
REGISTRANT AMENDS THIS REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, ON SUCH DATE AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL REGISTRANT FILES A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL
THE REGISTRATION STATEMENT BECOMES EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
CROSS-REFERENCE SHEET
PARTS A AND B OF PROSPECTUS*
<TABLE>
<CAPTION>
ITEMS IN PARTS A AND B OF FORM N-2 LOCATION
- -------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1. Outside Front Cover................................ Outside Front Cover
2. Inside Front and Outside Back Cover Page........... Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis............................. Prospectus Summary; Fee Table
4. Financial Highlights............................... Not Applicable
5. Plan of Distribution............................... Outside Front Cover; Purchase of Shares --
Underwriting
6. Selling Shareholders............................... Not Applicable
7. Use of Proceeds.................................... Use of Proceeds; Investment Objective and
Management Policies
8. General Description of Registrant.................. The Portfolio; Investment Objective and Management
Policies; Investment Restrictions; Net Asset
Value; Securities Transactions and Turnover;
Description of Capital Stock
9. Management......................................... Management of the Portfolio; Custodian, Transfer
Agent, Dividend-Paying Agent, Registrar and Plan
Agent; Greenwich Street Municipal Fund Inc.
Statement of Assets and Liabilities
10. Capital Stock, Long-Term Debt, and Other
Securities........................................ Dividends and Distributions; Dividend Reinvestment
Plan; Description of Capital Stock; Taxation;
Stock Purchases and Tenders
11. Defaults and Arrears on Senior Securities.......... Not Applicable
12. Legal Proceedings.................................. Not Applicable
13. Table of Contents of Statement of Additional
Information....................................... Not Applicable
14. Cover Page......................................... Not Applicable
15. Table of Contents.................................. Not Applicable
16. General Information and History.................... The Portfolio; Investment Objective and Management
Policies
17. Investment Objective and Policies.................. Investment Objective and Management Policies;
Investment Restrictions; Securities Transactions
and Turnover
18. Management......................................... Management of the Portfolio; Custodian, Transfer
Agent, Dividend-Paying Agent, Registrar and Plan
Agent
19. Control Persons and Principal Holders of
Securities........................................ Description of Capital Stock; Greenwich Street
Municipal Fund Inc. Statement of Assets and
Liabilities
</TABLE>
- ------------------------
* Pursuant to General Instruction H of Form N-2, all information required to be
set forth in Part B: Statement of Additional Information has been included in
Part A: The Prospectus.
<PAGE>
<TABLE>
<CAPTION>
ITEMS IN PARTS A AND B OF FORM N-2 LOCATION
- -------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
20. Investment Advisory and Other Services... Management of the Portfolio
21. Brokerage Allocation and Other
Practices............................... Securities Transactions and Turnover
22. Tax Status............................... Dividends and Distributions; Dividend
Reinvestment Plan; Taxation
23. Financial Statements..................... Experts; Report of Independent
Accountants; Greenwich Street Municipal
Fund Inc. Statement of Assets and
Liabilities
</TABLE>
PART C
Items 24-32 have been answered in order in Part C.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
Subject to Completion, dated May 19, 1994
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
PROSPECTUS June , 1994
Greenwich Street Municipal Fund Inc. (the "Portfolio") is a newly organized,
non-diversified, closed-end management investment company that seeks as high a
level of current income exempt from federal income tax as is consistent with the
preservation of principal. Under normal conditions, the Portfolio will, in
seeking its investment objective, invest substantially all of its assets in
long-term, investment grade obligations issued by state and local governments,
political subdivisions, agencies and public authorities. The Portfolio's address
is Two World Trade Center, New York, New York 10048 and the Portfolio's
telephone number is (212) 298-7315.
Shares of the Portfolio's Common Stock, par value $.001 per share ("Common
Stock"), will be offered through Smith Barney Shearson Inc. and certain of its
affiliates ("Smith Barney Shearson"), including The Robinson-Humphrey Company,
Inc. The minimum purchase during the offering described in this Prospectus (the
"Offering") is 100 shares of Common Stock ($1,200).
Investors are advised to read this Prospectus and to retain it for future
reference.
(CONTINUED ON PAGE 2)
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1)(2) THE PORTFOLIO(3)
<S> <C> <C> <C>
Per
Share... $12.00 $0.00 $12.00
Total(4).. $60,000,000 $0.00 $60,000,000
</TABLE>
(FOOTNOTES ON PAGE 2)
The shares of Common Stock offered by this Prospectus during the Offering are
offered by Smith Barney Shearson subject to prior sale, withdrawal, cancellation
or modification of the offer without notice, to delivery to and acceptance by
Smith Barney Shearson, and to certain other conditions. It is expected that
delivery of shares of Common Stock will be made at the offices of Smith Barney
Shearson, New York, New York, on or about ___________, 1994.
Smith Barney Shearson Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE>
(CONTINUED FROM PAGE 1)
No market has existed for the Common Stock prior to the Offering. The
Portfolio anticipates applying to list the Common Stock for trading on the New
York Stock Exchange, Inc. (the "NYSE"). Trading in the Common Stock will not
begin, however, until a date within 30 days of the date of this Prospectus.
Smith Barney Shearson does not intend to make a market in the Common Stock
during the period in which the Common Stock is not traded on the NYSE. As a
result, during that period, an investment in the Common Stock should be
considered illiquid. The shares of closed-end investment companies have in the
past frequently traded at discounts from their net asset values or initial
offering prices.
Smith Barney Shearson intends to make a market in the Common Stock after
trading in the Common Stock has commenced on the NYSE. Smith Barney Shearson,
however, is not obligated to conduct market-making activities and any such
activities may be discontinued at any time without notice, at the sole
discretion of Smith Barney Shearson. No assurance can be given as to the
liquidity of, or the trading market for, the Common Stock as a result of any
market-making activities undertaken by Smith Barney Shearson. This Prospectus is
to be used by Smith Barney Shearson in connection with the Offering and with
offers and sales of the Common Stock in market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of the sale.
- ----------------
(FOOTNOTES FROM PAGE 1)
(1) The Portfolio's shares of Common Stock will be sold during the offering
without any sales load. Smith Barney Shearson will compensate sales
personnel out of its own funds.
(2) The Portfolio has agreed to indemnify Smith Barney Shearson against certain
liabilities under the Securities Act of 1933, as amended.
(3) Before deducting organizational and offering expenses payable by the
Portfolio, estimated to be approximately $________.
(4) The Portfolio has granted Smith Barney Shearson an option to purchase up to
an additional 750,000 shares of Common Stock to cover over-allotments. If
the option is exercised in full, the Total Price to Public, Underwriting
Discounts and Commissions and Proceeds to the Portfolio will be
$69,000,000, $0.00 and $69,000,000, respectively. See "Purchase of Shares."
UNTIL , 1994, ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
________________________________________________________________________________
2
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary 4
-----------------------------------------------------------------
The Portfolio 10
-----------------------------------------------------------------
Use of Proceeds 11
-----------------------------------------------------------------
Investment Objective and Management Policies 11
-----------------------------------------------------------------
Investment Restrictions 31
-----------------------------------------------------------------
Management of the Portfolio 32
-----------------------------------------------------------------
Securities Transactions and Turnover 36
-----------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan 38
-----------------------------------------------------------------
Net Asset Value 40
-----------------------------------------------------------------
Taxation 41
-----------------------------------------------------------------
Description of Capital Stock 46
-----------------------------------------------------------------
Purchase of Shares 47
-----------------------------------------------------------------
Certain Provisions of the Articles of Incorporation 49
-----------------------------------------------------------------
Custodian, Transfer, and Dividend-Paying Agent,
Registrar and Plan Agent 52
-----------------------------------------------------------------
Legal Matters 52
-----------------------------------------------------------------
Reports to Shareholders 52
-----------------------------------------------------------------
Experts 52
-----------------------------------------------------------------
Further Information 53
-----------------------------------------------------------------
Report of Independent Accountants 54
-----------------------------------------------------------------
Greenwich Street Municipal Fund Inc.
Statement of Assets and Liabilities 55
-----------------------------------------------------------------
Appendix A A-1
-----------------------------------------------------------------
Appendix B B-1
-----------------------------------------------------------------
</TABLE>
3
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING IN THE BODY OF THIS PROSPECTUS. CROSS REFERENCES IN THIS
SUMMARY ARE TO HEADINGS IN THE BODY OF THE PROSPECTUS.
THE PORTFOLIO The Portfolio is a newly organized, non-diversified, closed-end
management investment company. See "The Portfolio."
INVESTMENT OBJECTIVE The Portfolio seeks as high a level of current income
exempt from federal income tax as is consistent with the preservation of
principal. See "Investment Objective and Management Policies."
TAX-EXEMPT INCOME The Portfolio is intended to operate in such a manner that
dividends paid by the Portfolio may be excluded by the Portfolio's shareholders
from their gross incomes for federal income tax purposes. See "Investment
Objective and Management Policies" and "Taxation."
QUALITY INVESTMENTS The Portfolio will invest substantially all of its assets in
long-term, investment grade obligations issued by state and local governments,
political subdivisions, agencies and public authorities. The Portfolio will
operate subject to a fundamental investment policy providing that, under normal
conditions, the Portfolio will invest at least 80% of its net assets in federal
tax-exempt obligations issued by state and local governments, political
subdivisions, agencies and public authorities. At least 80% of the Portfolio's
total assets will be invested in securities rated investment grade by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, Inc. ("Fitch") or another nationally-recognized rating
agency (that is, rated no lower than Baa, MIG or Prime-1 by Moody's, BBB, SP-2
or A-1 by S&P or BBB or F-1 by Fitch). Up to 20% of the Portfolio's total assets
may be invested in unrated securities that are deemed by the Portfolio's
investment adviser to be of a quality comparable to investment grade. See
"Investment Objective and Management Policies" and "Appendix A."
PURCHASE OF SHARES Common Stock may be purchased through Smith Barney Shearson.
See "Purchase of Shares."
THE OFFERING Shares of Common Stock will be offered at a price of $12.00 during
the Offering. See "Purchase of Shares."
The Portfolio anticipates applying to list the Common Stock on the NYSE.
Trading in the Common Stock will not begin, however, until a date
4
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
within 30 days of the date of this Prospectus. Smith Barney Shearson does not
intend to make a market in the Common Stock during the period in which the
Common Stock is not traded on the NYSE. As a result, during that period, an
investment in the Common Stock should be considered illiquid. Smith Barney
Shearson intends to make a market in the Common Stock after trading in the
Common Stock has commenced on the NYSE. Smith Barney Shearson, however, is not
obligated to conduct market-making activities and any such activities may be
discontinued at any time without notice, at the sole discretion of Smith Barney
Shearson. No assurance can be given as to the liquidity of, or the trading
market for, the Common Stock as a result of any market-making activities
undertaken by Smith Barney Shearson. See "Purchase of Shares."
NO SALES CHARGES The Common Stock will be sold during the Offering subject to no
sales charges or underwriting discounts, but Smith Barney Shearson Financial
Consultants will receive compensation from Smith Barney Shearson in connection
with sales of Common Stock. See "Purchase of Shares."
MINIMUM PURCHASE The minimum purchase during the Offering is 100 shares
($1,200). See "Purchase of Shares."
INVESTMENT MANAGER Greenwich Street Advisors, a division of Mutual Management
Corp., serves as the Portfolio's investment manager (the "Investment Manager").
The Investment Manager provides investment advisory and management services to
investment companies affiliated with Smith Barney Shearson. Smith Barney
Shearson is a wholly owned subsidiary of Smith Barney Shearson Holdings Inc.,
which is in turn a wholly owned subsidiary of The Travelers Inc. ("Travelers").
Subject to the supervision and direction of the Portfolio's Board of Directors,
the Investment Manager manages the securities held by the Portfolio in
accordance with the Portfolio's stated investment objectives and policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs professional portfolio
managers. Mutual Management Corp. acts as administrator of the Portfolio and in
that capacity provides certain administrative services, including overseeing the
Portfolio's non-investment operations and its relations with other service
providers and providing executive and other officers to the Portfolio. The
Portfolio pays the Investment Manager a fee ("Management Fee") for
5
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
services provided to the Portfolio that is computed daily and paid monthly at
the annual rate of 0.90% of the value of the Portfolio's average daily net
assets. This Management Fee is higher than the rates for similar services paid
by other recently organized, publicly offered, closed-end, management investment
companies that have investment objectives and policies similar to those of the
Fund. The Portfolio will bear other expenses and costs in connection with its
operation in addition to the costs of investment management services. See
"Management of the Portfolio -- Investment Manager."
SUB-ADMINISTRATOR The Boston Company Advisors, Inc. ("Boston Advisors") serves
as the Portfolio's sub-administrator pursuant to an agreement with Mutual
Management Corp. Boston Advisors is a wholly owned subsidiary of The Boston
Company, Inc. ("TBC"), a financial services holding company, which is a wholly
owned subsidiary of Mellon Bank Corporation ("Mellon"). See "Management of the
Portfolio -- Sub-Administrator."
CUSTODIAN Boston Safe Deposit and Trust Company ("Boston Safe") serves as the
Portfolio's custodian. See "Custodian, Transfer Agent, Dividend-Paying Agent,
Registrar and Plan Agent."
TRANSFER AGENT, DIVIDEND-PAYING AGENT, REGISTRAR AND PLAN AGENT The Shareholder
Services Group, Inc. ("TSSG") serves as the Portfolio's transfer agent,
dividend-paying agent and registrar. See "Custodian, Transfer Agent,
Dividend-Paying Agent, Registrar and Plan Agent."
DIVIDENDS AND DISTRIBUTIONS The Portfolio expects to pay monthly dividends of
net investment income (that is, income other than net realized capital gains)
and to distribute net realized capital gains, if any, annually. All dividends or
distributions with respect to shares of Common Stock will be reinvested
automatically in additional shares through participation in the Portfolio's
Dividend Reinvestment Plan, unless a shareholder elects to receive cash. When
the market price of the Common Stock is equal to or exceeds net asset value,
participants in the Portfolio's Dividend Reinvestment Plan will receive
distributions through issuance of additional shares of Common Stock valued at
net asset value or, if the net asset value is less than 95% of the then current
market price of the Common Stock, then at 95% of the
6
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
market price. Whenever market price is less than net asset value, participants
will receive distributions through purchases of shares on the open market. See
"Dividends and Distributions; Dividend Reinvestment Plan."
Initial dividends to Common Stock shareholders are expected to be declared
approximately 60 days, and paid approximately 90 days, from the completion of
the Offering. See "Dividends and Distributions; Dividend Reinvestment Plan" and
"Taxation."
RISK FACTORS AND SPECIAL CONSIDERATIONS The Portfolio is a closed-end investment
company with no history of operations that is designed primarily for long-term
investors and not as a trading vehicle. The net asset value of the Common Stock
will change with changes in the value of the securities held by the Portfolio.
Because the Portfolio will invest primarily in fixed-income securities, the net
asset value of the Common Stock can be expected to change as levels of interest
rates fluctuate; generally, when prevailing interest rates increase, the value
of fixed-income securities held by the Portfolio can be expected to decrease and
when prevailing interest rates decrease, the value of the fixed-income
securities held by the Portfolio can be expected to increase. The value of the
fixed-income securities held by the Portfolio, and thus the Portfolio's net
asset value, may also be affected by other economic, market and credit factors.
The net asset value of the Portfolio may be subject to greater fluctuation to
the extent that the Portfolio invests in zero coupon securities. See "Investment
Objective and Management Policies -- Risk Factors and Special Considerations."
The Portfolio will not purchase securities that are rated lower than Baa by
Moody's, BBB by S&P or BBB by Fitch at the time of purchase. Although
obligations rated Baa by Moody's, BBB by S&P or BBB by Fitch are considered to
be investment grade, they may be subject to greater risks than other higher
rated investment grade securities. Obligations rated Baa by Moody's, for
example, are considered medium grade obligations that lack outstanding
investment characteristics and have speculative characteristics as well;
obligations rated BBB by S&P are regarded as having an adequate capacity to pay
principal and interest, and obligations rated BBB by Fitch are deemed to be
subject to an increased likelihood that their rating will fall below investment
grade than higher rated bonds. See "Investment Objective and Management Policies
- -- Quality Standards" and "-- Risk Factors and Special Considerations."
7
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
The Portfolio may invest up to 20% of its total assets in unrated securities
that the Investment Manager determines to be of comparable quality to the
securities rated investment grade in which the Portfolio may invest. Dealers may
not maintain daily markets in unrated securities and retail secondary markets
for many of them may not exist; this lack of markets may affect the Portfolio's
ability to sell these securities when the Investment Manager deems it
appropriate. The Portfolio has the right to invest without limitation in state
and local obligations that are "private activity bonds," the income from which
may be taxable as a specific preference item for purposes of the federal
alternative minimum tax. Thus, the Portfolio may not be a suitable investment
for investors who are subject to the alternative minimum tax. See "Investment
Objective and Management Policies" and "Taxation."
Certain of the instruments held by the Portfolio, and certain of the
investment techniques that the Portfolio may employ, might expose the Portfolio
to special risks. The instruments presenting the Portfolio with risks are
municipal leases, zero coupon securities, custodial receipts, municipal
obligation components, floating and variable rate demand notes and bonds, and
participation interests. Entering into securities transactions on a when-issued
or delayed delivery basis, entering into repurchase agreements, lending
portfolio securities, and engaging in financial futures and options
transactions, are investment techniques involving risks to the Portfolio. As a
non-diversified fund within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), the Portfolio may invest a greater proportion of
its assets in the obligations of a smaller number of issuers and, as a result,
may be subject to greater risk than a diversified fund with respect to its
holdings of securities. See "Investment Objective and Management Policies --
Risk Factors and Special Considerations."
The Portfolio's Articles of Incorporation include provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Portfolio and of depriving shareholders of an opportunity to sell
their shares of Common Stock at a premium over prevailing market prices. See
"Certain Provisions of the Articles of Incorporation."
During the period in which Smith Barney Shearson will be soliciting
indications of interest with respect to the Common Stock, the Portfolio and
Smith Barney Shearson will evaluate the market for the Common Stock as
8
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
well as the market for the Portfolio's contemplated investments. If changes in
existing market and other conditions make it impractical or inadvisable to
proceed with the Offering, the Offering will not be made. See "Purchase of
Shares."
DISCOUNT FROM NET ASSET VALUE The shares of closed-end investment companies,
when listed for trading on a securities exchange, often, although not always,
trade at a discount from their net asset value. The Common Stock, when traded on
the NYSE, may likewise trade at a discount from net asset value. In addition,
the trading price of the Common Stock when listed may be less than the public
offering price per share of Common Stock applicable to the Offering. The
Portfolio's market price risk may be greater for investors who intend to sell
their shares of Common Stock within a relatively short period after completion
of the Offering. See "Investment Objective and Management Policies -- Risk
Factors and Special Considerations" and "Purchase of Shares."
FEE TABLE
The following tables are intended to assist investors in understanding the
various costs and expenses directly or indirectly associated with investing in
the Portfolio.
<TABLE>
<CAPTION>
------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price) 0%
Dividend Reinvestment Plan Fees and Cash Purchase
Plan Fees 0%
------------------------------------------------------------------
ANNUAL EXPENSES
(as a percentage of net assets attributable to
Common Stock)
Management Fees 0.90%
------------------------------------------------------------------
Other Expenses (estimated) 0.20%
------------------------------------------------------------------
TOTAL ANNUAL EXPENSES (ESTIMATED) 1.10%
------------------------------------------------------------------
</TABLE>
"Management Fees" as shown above, is for the initial fiscal year of the
Portfolio. See "Use of Proceeds" and "Management of the Portfolio" for
additional information. "Other Expenses", as shown above, is based upon
estimated amounts of expenses for the initial fiscal year.
9
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Portfolio. These amounts are based upon payment
by the Portfolio of operating expenses at the levels set forth in the table
above.
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) reinvestment of all dividends and distributions
at net asset value:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
$ 11 $ 35 $ 61 $ 134
--------------------------------------------------------------------------------
</TABLE>
This example should not be considered a representation of future expenses of
the Portfolio and actual expenses may be greater or less than those shown.
Moreover, while the example assumes a 5% annual return, the Portfolio's
performance will vary and may result in a return greater or less than 5%. In
addition, while the example assumes reinvestment of all dividends and
distributions at net asset value, participants in the Portfolio's Dividend
Reinvestment Plan may receive shares purchased or issued at a price or value
different from net asset value. See "Dividends and Distributions; Dividend
Reinvestment Plan."
- --------------------------------------------------------------------
THE PORTFOLIO
The Portfolio is a newly organized, non-diversified, closed-end management
investment company that seeks as high a level of current income exempt from
federal income tax as is consistent with the preservation of principal. The
Portfolio, which was incorporated under the laws of the State of Maryland on
February 19, 1993, is registered under the 1940 Act, and has its principal
office at Two World Trade Center, New York, New York 10048. The Portfolio's
telephone number is (212) 298-7315.
10
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
USE OF PROCEEDS
The net proceeds from the sale of shares of Common Stock in the Offering will
be approximately $ after deducting offering expenses of the Portfolio,
estimated to be approximately $ .
The net proceeds of the Offering will be invested in accordance with the
Portfolio's investment objective and management policies (as stated below) as
soon as practicable after completion of the Offering; the Portfolio currently
anticipates being able to be fully invested within 90 days of the completion of
the Offering. Pending investment of the net proceeds in accordance with the
Portfolio's investment objective and management policies, the Portfolio will
invest in high quality, short-term, tax-exempt money market securities or in
high quality obligations issued by state or local governments, political
subdivisions, agencies and public authorities with relatively low volatility
(such as pre-funded and intermediate-term securities), to the extent those types
of securities are available. Investors should expect that, before the Portfolio
has fully invested the proceeds of the Offering in accordance with the
Portfolio's investment objective and management policies, the Portfolio's yield
would be somewhat less, but that its net asset value would be subject to less
fluctuation, than would be the case at such time as the Portfolio is fully
invested. If necessary to invest fully the net proceeds of the Offering
immediately, the Portfolio may purchase short-term taxable investments of the
type described under "Investment Objective and Management Policies -- Taxable
Investments."
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
Set out below is a description of the investment objective and principal
investment policies of the Portfolio. No assurance can be given that the
Portfolio will be able to achieve its investment objective, which may be changed
only with the approval of a majority of the Portfolio's outstanding voting
securities as defined in the 1940 Act. Such a majority is defined in the 1940
Act as the lesser of (1) 67% or more of the shares present at a meeting of the
Portfolio, if the holders of more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy or (2) more than 50% of the
outstanding shares of the Portfolio.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
GENERAL
The Portfolio's investment objective is to seek as high a level of current
income exempt from federal income taxes as is consistent with the preservation
of principal. In seeking its objective, the Portfolio will invest in investment
grade debt obligations issued by, or on behalf of, states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities or multistate agencies or
authorities, the interest from which debt obligations is, in the opinion of bond
counsel to their issuer, excluded from gross income for federal income tax
purposes ("Municipal Obligations"). The Portfolio will operate subject to a
fundamental investment policy providing that, under normal conditions, the
Portfolio will invest at least 80% of its net assets in Municipal Obligations.
The Portfolio will generally invest in long-term Municipal Obligations; under
normal market conditions, the weighted average maturity of the Portfolio's
securities is expected to be in excess of 20 years.
The Portfolio is classified as a non-diversified fund under the 1940 Act,
which means that the Portfolio is not limited by the 1940 Act in the proportion
of its assets that it may invest in the obligations of a single issuer. The
Portfolio intends to conduct its operations, however, so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue Code of
1986, as amended (the "Code"), which will relieve the Portfolio of any liability
for federal income tax to the extent that its earnings are distributed to
shareholders. To qualify as a regulated investment company, the Portfolio will,
among other things, limit its investments so that, at the close of each quarter
of its taxable year (1) not more than 25% of the market value of the Portfolio's
total assets will be invested in the securities of a single issuer and (2) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer. See "Taxation."
The Portfolio generally will not invest more than 25% of its total assets in
any industry. Governmental issuers of Municipal Obligations are not considered
part of any "industry." Municipal Obligations backed only by the assets and
revenues of non-governmental users may be deemed to be issued by the
non-governmental users, and would be subject to the Portfolio's 25% industry
limitation.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
The Portfolio may invest more than 25% of its total assets in a broad segment
of the Municipal Obligations market, such as revenue obligations of hospitals
and other health care facilities, housing agency revenue obligations, or airport
revenue obligations, if the Investment Manager determines that the yields
available from obligations in a particular segment of the market justify the
additional risks associated with a large investment in the segment. Although
these Municipal Obligations could be supported by the credit of governmental
users, or by the credit of non-governmental users engaged in a number of
industries, economic, business, political and other developments generally
affecting the revenues of the users (for example, proposed legislation or
pending court decisions affecting the financing of projects and market factors
affecting the demand for their services or products) may have a general adverse
effect on all municipal securities in such a market segment. The Portfolio
reserves the right to invest more than 25% of its assets in industrial
development bonds or in issuers located in the same state, although it has no
current intention of investing more than 25% of its assets in issuers located in
the same state. If the Portfolio were to invest more than 25% of its total
assets in issuers located in the same state, it would be more susceptible to
adverse economic, business or regulatory conditions in that state.
From time to time, the Portfolio's investments may include securities as to
which the Portfolio, by itself or together with other funds or accounts managed
by the Investment Manager, holds a major portion or all of an issue of Municipal
Obligations. Because relatively few potential purchasers may be available for
these investments and, in some cases, contractual restrictions may apply on
resales, the Portfolio may find it more difficult to sell these securities at a
time when the Investment Manager believes it is advisable to do so.
MUNICIPAL OBLIGATIONS
Municipal Obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general taxing
power. Notes are short-term obligations of issuing municipalities or
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations bear fixed, floating and
variable rates of interest, and variations exist in the security of Municipal
Obligations, both within a particular classification and between
classifications.
The yields on, and values of, Municipal Obligations are dependent on a variety
of factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligation markets, size of a particular
offering, maturity of the obligation and rating of the issue. Consequently,
Municipal Obligations with the same maturity, coupon and rating may have
different yields or values, whereas obligations of the same maturity and coupon
with different ratings may have the same yield or value. See "Risk Factors and
Special Considerations -- Municipal Obligations."
Issuers of Municipal Obligations may be subject to the provisions of
bankruptcy, insolvency and other laws, such as the Federal Bankruptcy Reform Act
of 1978, affecting the rights and remedies of creditors. In addition, the
obligations of those issuers may become subject to laws enacted in the future by
Congress, state legislatures or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of the
obligations or upon the ability of municipalities to levy taxes. The possibility
also exists that, as a result of litigation or other conditions, the power or
ability of any issuer to pay, when due, the principal of, and interest on, its
obligations may be materially affected.
QUALITY STANDARDS
The Portfolio will typically purchase a Municipal Obligation if the Investment
Manager believes that the yield of the obligation is sufficiently attractive in
light of the risks of ownership of the obligation. In determining whether the
Portfolio should invest in particular Municipal Obligations, Greenwich Street
Advisors will consider factors such as: the price, coupon and yield to maturity
of the obligations; the Investment Manager's assessment of the credit quality of
the issuer of the obligations; the issuer's available cash flow and the related
coverage ratios; the property, if any, securing the obligations; and the terms
of the obligations, including
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
subordination, default, sinking fund and early redemption provisions. The
Investment Manager will also review the ratings, if any, assigned to the
securities by Moody's, S&P, Fitch or another nationally-recognized rating
agency.
The Portfolio will invest at least 80% of its total assets in Municipal
Obligations rated investment grade, that is, rated no lower than Baa, MIG 3 or
Prime-1 by Moody's, BBB, SP-2 or A-1 by S&P or BBB or F-1 by Fitch. Up to 20% of
the Portfolio's total assets may be invested in unrated securities that are
deemed by the Investment Manager to be of a quality comparable to investment
grade. The Portfolio will not invest in Municipal Obligations that are rated
lower than Baa by Moody's, BBB by S&P or BBB by Fitch, at the time of purchase.
Although Municipal Obligations rated Baa by Moody's, BBB by S&P or BBB by Fitch
are considered to be investment grade, they may be subject to greater risks than
other higher rated investment grade securities. Municipal Obligations rated Baa
by Moody's, for example, are considered medium grade obligations that lack
outstanding investment characteristics and have speculative characteristics as
well. Municipal Obligations rated BBB by S&P are regarded as having an adequate
capacity to pay principal and interest. Municipal Obligations rated BBB by Fitch
are deemed to be subject to a higher likelihood that their rating will fall
below investment grade than higher rated bonds.
The ratings of agencies such as Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations that they undertake to
rate; the ratings are relative and subjective and are not absolute standards of
quality. The Investment Manager's judgment as to the credit quality of a
Municipal Obligation, thus, may differ from that suggested by the ratings
published by a rating service. A description of Moody's, S&P and Fitch ratings
relevant to the Portfolio's investments is included as Appendix A to this
Prospectus. The policies of the Portfolio described above as to ratings of
investments will apply only at the time of the purchase of a security, and the
Portfolio will not be required to dispose of a security in the event Moody's,
S&P or Fitch downgrades its assessment of the credit characteristics of the
security's issuer.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
PRIVATE ACTIVITY BONDS
The Portfolio may invest without limit in Municipal Obligations that are
tax-exempt "private activity bonds," as defined in the Code, which are in most
cases revenue bonds. Private activity bonds generally do not carry the pledge of
the credit of the issuing municipality, but are guaranteed by the corporate
entity on whose behalf they are issued. Interest income on certain types of
private activity bonds issued after August 7, 1986 to finance nongovernmental
activities is a specific tax preference item for purposes of the federal
individual and corporate alternative minimum taxes. Individual and corporate
shareholders may be subject to a federal alternative minimum tax to the extent
that the Portfolio's dividends are derived from interest on these bonds.
Dividends derived from interest income on Municipal Obligations are a "current
earnings" adjustment item for purposes of the federal corporate alternative
minimum tax. See "Taxation." Private activity bonds held by the Portfolio will
be included in the term Municipal Obligations for purposes of determining
compliance with the Portfolio's policy of investing at least 80% of its total
assets in Municipal Obligations.
TYPES OF MUNICIPAL OBLIGATIONS HELD BY THE PORTFOLIO
MUNICIPAL LEASES. Among the Municipal Obligations in which the Portfolio may
invest are municipal leases, which may take the form of a lease or an
installment purchase or conditional sales contract to acquire a wide variety of
equipment and facilities. Interest payments on qualifying municipal leases are
exempt from federal income taxes and state income taxes within the state of
issuance. The Portfolio may invest in municipal leases containing
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for the purpose by the applicable legislative body on a yearly or
other periodic basis.
Municipal leases that the Portfolio may acquire will be both rated and
unrated. Rated leases that may be held by the Portfolio include those rated
investment grade at the time of investment (that is, rated no lower than Baa by
Moody's, BBB by S&P or BBB by Fitch). The Portfolio may acquire unrated issues
that the Investment Manager deems to be comparable in quality to rated issues in
which the Portfolio is authorized to invest. A determination by the Investment
Manager that an unrated lease obligation is
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
comparable in quality to a rated lease obligation will be made on the basis of,
among other things, a consideration of whether the nature of the leased
equipment or other property is such that its ownership or use is reasonably
essential to a governmental function of the issuing municipality. In addition,
all such determinations made by the Investment Manager will be subject to
oversight and approval by the Portfolio's Board of Directors.
Municipal leases held by the Portfolio will be considered illiquid securities
unless the Portfolio's Board of Directors determines on an ongoing basis that
the leases are readily marketable. An unrated municipal lease with a non-
appropriation risk that is backed by an irrevocable bank letter of credit or an
insurance policy issued by a bank or insurer deemed by the Investment Manager to
be of high quality and minimal credit risk will not be deemed to be illiquid
solely because the underlying municipal lease is unrated, if the Investment
Manager determines that the lease is readily marketable because it is backed by
the letter of credit or insurance policy.
Municipal leases are subject to special risks described below under "Risk
Factors and Special Considerations." To limit those risks, the Portfolio will
invest no more than 5% of its total assets in lease obligations that contain
non-appropriation clauses and will only purchase a non-appropriation lease
obligation with respect to which (1) the nature of the leased equipment or other
property is such that its ownership or use is reasonably essential to a
governmental function of the issuing municipality, (2) the lease payments will
begin to amortize the principal balance due at an early date, resulting in an
average life of five years or less for the lease obligation, (3) appropriate
covenants will be obtained from the municipal obligor prohibiting the
substitution or purchase of similar equipment or other property if lease
payments are not appropriated, (4) the lease obligor has maintained good market
acceptability in the past, (5) the investment is of a size that will be
attractive to institutional investors and (6) the underlying leased equipment or
other property has elements of portability and/or use that enhance its
marketability in the event that foreclosure on the underlying equipment or other
property were ever required.
ZERO COUPON SECURITIES. The Portfolio may invest up to 10% of its assets in
zero coupon Municipal Obligations. Zero coupon Municipal Obligations are
generally divided into two categories: Pure Zero Obligations, which are those
that pay no interest for their entire life and Zero/Fixed Obligations,
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
which pay no interest for some initial period and thereafter pay interest
currently. In the case of a Pure Zero Obligation, the failure to pay interest
currently may result from the obligation's having no stated interest rate, in
which case the obligation pays only principal at maturity and is issued at a
discount from its stated principal amount. A Pure Zero Obligation may, in the
alternative, specify a stated interest rate, but provide that no interest is
payable until maturity, in which case accrued unpaid interest on the obligation
may be capitalized as incremental principal. The value to the investor of a zero
coupon Municipal Obligation consists of the economic accretion either of the
difference between the purchase price and the nominal principal amount (if no
interest is stated to accrue) or of accrued, unpaid interest during the
Municipal Obligation's life or payment deferral period.
CUSTODIAL RECEIPTS. The Portfolio may acquire custodial receipts or
certificates underwritten by securities dealers or banks that evidence ownership
of future interest payments, principal payments or both on certain Municipal
Obligations. The underwriter of these certificates or receipts typically
purchases Municipal Obligations and deposits the obligations in an irrevocable
trust or custodial account with a custodian bank, which then issues receipts or
certificates that evidence ownership of the periodic unmatured coupon payments
and the final principal payment on the obligations. Custodial receipts
evidencing specific coupon or principal payments have the same general
attributes as zero coupon Municipal Obligations described above. Although under
the terms of a custodial receipt, the Portfolio would be typically authorized to
assert its rights directly against the issuer of the underlying obligation, the
Portfolio could be required to assert through the custodian bank those rights as
may exist against the underlying issuer. Thus, in the event the underlying
issuer fails to pay principal and/or interest when due, the Portfolio may be
subject to delays, expenses and risks that are greater than those that would
have been involved if the Portfolio had purchased a direct obligation of the
issuer. In addition, in the event that the trust or custodial account in which
the underlying security has been deposited is determined to be an association
taxable as a corporation, instead of a non-taxable entity, the yield on the
underlying security would be reduced in recognition of any taxes paid.
MUNICIPAL OBLIGATION COMPONENTS. The Portfolio may invest in Municipal
Obligations, the interest rate on which has been divided by the issuer
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
into two different and variable components, which together result in a fixed
interest rate. Typically, the first of the components (the "Auction Component")
pays an interest rate that is reset periodically through an auction process,
whereas the second of the components (the "Residual Component") pays a residual
interest rate based on the difference between the total interest paid by the
issuer on the Municipal Obligation and the auction rate paid on the Auction
Component. The Portfolio may purchase both Auction and Residual Components.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate Municipal Obligation having similar credit quality, redemption provisions
and maturity.
FLOATING AND VARIABLE RATE INSTRUMENTS. The Portfolio may purchase floating
and variable rate demand notes and bonds, which are Municipal Obligations
normally having a stated maturity in excess of one year, but which permit their
holder to demand payment of principal at any time, or at specified intervals.
The issuer of floating and variable rate demand obligations normally has a
corresponding right, after a given period, to prepay at its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of the obligations. The interest
rate on a floating rate demand obligation is based on a known lending rate, such
as a bank's prime rate, and is adjusted automatically each time that rate is
adjusted. The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals. Frequently, floating and variable rate
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit support
arrangements will not adversely affect the tax-exempt status of these
obligations. Because they are direct lending arrangements between the lender and
borrower, floating and variable rate obligations will generally not be traded.
In addition, no secondary market generally exists for these obligations,
although their holders may demand their payment at face value. For these
reasons, when floating and variable
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
rate obligations held by the Portfolio are not secured by letters of credit or
other credit support arrangements, the Portfolio's right to demand payment is
dependent on the ability of the borrower to pay principal and interest on
demand. The Investment Manager, on behalf of the Portfolio, will consider, on an
ongoing basis, the creditworthiness of the issuers of floating and variable rate
demand obligations held by the Portfolio. To the extent the Portfolio holds
certain floating and variable rate demand obligations or Auction Components, the
Portfolio may not, under certain market conditions, be fully achieving its
investment objective.
PARTICIPATION INTERESTS. The Portfolio may purchase from financial
institutions tax-exempt participation interests in Municipal Obligations. A
participation interest gives the Portfolio an undivided interest in the
Municipal Obligation in the proportion that the Portfolio's participation
interest bears to the total amount of the Municipal Obligation. These
instruments may have floating or variable rates of interest. If the
participation interest is unrated, it will be backed by an irrevocable letter of
credit or guarantee of a bank that the Portfolio's Board of Directors has
determined meets certain quality standards or the payment obligation otherwise
will be collateralized by obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government securities").
The Portfolio will have the right, with respect to certain participation
interests, to demand payment, on a specified number of days' notice, for all or
any part of the Portfolio's interest in the Municipal Obligation, plus accrued
interest. The Portfolio intends to exercise its right with respect to these
instruments to demand payment only upon a default under the terms of the
Municipal Obligation or to maintain or improve the quality of the instruments it
holds. In addition, the Portfolio will invest no more than 5% of its total
assets in participation interests.
TAXABLE INVESTMENTS
Under normal conditions, the Portfolio may hold up to 20% of its total assets
in cash or money market instruments, including taxable money market instruments
(collectively, "Taxable Investments"). In addition, the Portfolio may take a
temporary defensive posture and invest without limitation in
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
short-term Municipal Obligations and Taxable Investments, upon a determination
by the Investment Manager that market conditions warrant such a posture. To the
extent the Portfolio holds Taxable Investments, the Portfolio will not be
pursuing its investment objective.
Money market instruments in which the Portfolio may invest include: U.S.
Government securities; tax-exempt notes of municipal issuers rated, at the time
of purchase, no lower than MIG 1 by Moody's, SP-1 by S&P or F-1 by Fitch or, if
not rated, by issuers having outstanding, unsecured debt then rated within the
three highest rating categories; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic banks, domestic
savings and loan associations and similar institutions); commercial paper rated
no lower than P-1 by Moody's, A-1 by S&P or F-1 by Fitch or the equivalent from
another nationally-recognized rating agency or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; and repurchase agreements. At no time will the Portfolio's
investments in bank obligations, including time deposits, exceed 25% of the
value of its assets.
U.S. Government securities in which the Portfolio may invest include direct
obligations of the United States and obligations issued by U.S. Government
agencies and instrumentalities. Included among direct obligations of the United
States are Treasury Bills, Treasury Notes and Treasury Bonds, which differ
principally in terms of their maturities. Included among the securities issued
by U.S. Government agencies and instrumentalities are: securities that are
supported by the full faith and credit of the United States (such as Government
National Mortgage Association certificates); securities that are supported by
the right of the issuer to borrow from the U.S. Treasury (such as securities of
Federal Home Loan Banks); and securities that are supported by the credit of the
instrumentality (such as Federal National Mortgage Association and Federal Home
Loan Mortgage Corporation bonds).
The Portfolio may enter into repurchase agreement transactions with member
banks of the Federal Reserve System or with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. A repurchase
agreement is a contract under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon price on an
agreed-upon date. Under the terms of a typical repurchase
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
agreement, the Portfolio would acquire an underlying debt obligation for a
relatively short period subject to an obligation of the seller to repurchase,
and the Portfolio to resell, the obligation at an agreed-upon price and time,
thereby determining the yield during the Portfolio's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Portfolio's holding period. Under each repurchase
agreement, the selling institution will be required to maintain the value of the
securities subject to the repurchase agreement at not less than their repurchase
price.
The value of the securities underlying a repurchase agreement of the Portfolio
will be monitored on an ongoing basis by the Investment Manager or Boston
Advisors to ensure that the value is at least equal at all times to the total
amount of the repurchase obligation, including interest. The Investment Manager
will also monitor, on an ongoing basis to evaluate potential risks, the
creditworthiness of the banks and dealers with which the Portfolio enters into
repurchase agreements.
INVESTMENT TECHNIQUES
The Portfolio may employ, among others, the investment techniques described
below, which may give rise to taxable income:
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase
securities on a when-issued basis, or may purchase or sell securities for
delayed delivery. In when-issued or delayed delivery transactions, delivery of
the securities occurs beyond normal settlement periods, but no payment or
delivery will be made by the Portfolio prior to the actual delivery or payment
by the other party to the transaction. The Portfolio will not accrue income with
respect to a when-issued or delayed delivery security prior to its stated
delivery date. The Portfolio will establish with Boston Safe a segregated
account consisting of cash, U.S. Government securities, or other liquid high
grade debt obligations, in an amount equal to the amount of the Portfolio's
when-issued and delayed delivery purchase commitments. Placing securities rather
than cash in the segregated account may have a leveraging effect on the
Portfolio's net asset value per share; that is, to the extent that the Portfolio
remains substantially fully invested in securities at the same
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
time that it has committed to purchase securities on a when-issued or delayed
delivery basis, greater fluctuations in its net asset value per share may occur
than if it had set aside cash to satisfy its purchase commitments.
STAND-BY COMMITMENTS. The Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations it holds. Under a stand-by commitment, which
resembles a put option, a broker, dealer or bank is obligated to repurchase at
the Portfolio's option specified securities at a specified price. Each exercise
of a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Portfolio will acquire stand-by commitments solely
to facilitate liquidity and does not intend to exercise the rights afforded by
the commitments for trading purposes. The Portfolio anticipates that stand-by
commitments will be available from brokers, dealers and banks without the
payment of any direct or indirect consideration. The Portfolio may pay for
stand-by commitments if payment is deemed necessary, thus increasing to a degree
the cost of the underlying Municipal Obligation and similarly decreasing the
obligation's yield to investors.
FINANCIAL FUTURES AND OPTIONS TRANSACTIONS. To hedge against a decline in the
value of Municipal Obligations it owns or an increase in the price of Municipal
Obligations it proposes to purchase, the Portfolio may enter into financial
futures contracts and invest in options on financial futures contracts that are
traded on a U.S. exchange or board of trade. The futures contracts or options on
futures contracts that may be entered into by the Portfolio will be restricted
to those that are either based on an index of Municipal Obligations or relate to
debt securities the prices of which are anticipated by the Investment Manager to
correlate with the prices of the Municipal Obligations owned or to be purchased
by the Portfolio.
In entering into a financial futures contract, the Portfolio will be required
to deposit with the broker through which it undertakes the transaction an amount
of cash or cash equivalents equal to approximately 5% of the contract amount.
This amount, which is known as "initial margin," is subject to change by the
exchange or board of trade on which the contract is traded, and members of the
exchange or board of trade may charge a higher amount. Initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Portfolio upon termination of the futures contract, assuming all
contractual obligations have
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
been satisfied. In accordance with a process known as "marking-to-market,"
subsequent payments, known as "variation margin," to and from the broker will be
made daily as the price of the index or securities underlying the futures
contract fluctuates, making the long and short positions in the futures contract
more or less valuable. At any time prior to the expiration of a futures
contract, the Portfolio may elect to close the position by taking an opposite
position, which will operate to terminate the Portfolio's existing position in
the contract.
A financial futures contract provides for the future sale by one party and the
purchase by the other party of a certain amount of a specified property at a
specified price, date, time and place. Unlike the direct investment in a futures
contract, an option on a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in the financial
futures contract at a specified exercise price at any time prior to the
expiration date of the option. Upon exercise of an option, the delivery of the
futures position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case of
a put, the exercise price of the option on the futures contract. The potential
loss related to the purchase of an option on financial futures contracts is
limited to the premium paid for the option (plus transaction costs). The value
of the option may change daily and that change would be reflected in the net
asset value of the Portfolio.
Regulations of the Commodity Futures Trading Commission applicable to the
Portfolio require that its transactions in financial futures contracts and
options on financial futures contracts be engaged in for bona fide hedging
purposes or other permitted purposes, and that no such transactions may be
entered into by the Portfolio if the aggregate initial margin deposits and
premiums paid by the Portfolio exceed 5% of the market value of its assets. In
addition, the Portfolio will, with respect to its purchases of financial futures
contracts, establish a segregated account consisting of cash or cash equivalents
in an amount equal to the total market value of the futures contracts, less the
amount of initial margin on deposit for the contracts. The Portfolio's ability
to trade in financial futures contracts and options on
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GREENWICH STREET MUNICIPAL FUND INC.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
financial futures contracts may be limited to some extent by the requirements of
the Code applicable to a regulated investment company that are described below
under "Taxation."
LENDING SECURITIES. The Portfolio is authorized to lend securities it holds to
brokers, dealers and other financial organizations, but it will not lend
securities to any affiliate of the Investment Manager, including Smith Barney
Shearson, unless the Portfolio applies for and receives specific authority to do
so from the Securities and Exchange Commission (the "SEC"). Loans of the
Portfolio's securities, if and when made, may not exceed 33 1/3% of the
Portfolio's assets taken at value. The Portfolio's loans of securities will be
collateralized by cash, letters of credit or U.S. Government securities that
will be maintained at all times in a segregated account with Boston Safe in an
amount equal to the current market value of the loaned securities. From time to
time, the Portfolio may pay a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third party
that is unaffiliated with the Portfolio and that is acting as a "finder."
By lending its securities, the Portfolio can increase its income by continuing
to receive interest on the loaned securities, by investing the cash collateral
in short-term instruments or by obtaining yield in the form of interest paid by
the borrower when U.S. Government securities are used as collateral. The
Portfolio will adhere to the following conditions whenever it lends its
securities: (1) the Portfolio must receive at least 100% cash collateral or
equivalent securities from the borrower, which amount of collateral will be
maintained by daily marking to market; (2) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (3) the Portfolio must be able to terminate the loan at
any time; (4) the Portfolio must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities,
and any increase in market value; (5) the Portfolio may pay only reasonable
custodian fees in connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower, except that, if a material event adversely
affecting the investment in the loaned securities occurs, the Portfolio's Board
of Directors must terminate the loan and retain the Portfolio's right to vote
the securities.
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Portfolio involves risk factors and special considerations,
such as those described below:
MUNICIPAL OBLIGATIONS. Substantially all of the Portfolio's total assets will
be invested, under normal market conditions, in Municipal Obligations rated
investment grade at the time of investment. Market rates of interest available
with respect to Municipal Obligations generally may be lower than those
available with respect to taxable securities, although the differences may be
wholly or partially offset by the effects of federal income tax on income
derived from taxable securities. The amount of available information about the
financial condition of issuers of Municipal Obligations may be less extensive
than that for corporate issuers with publicly traded securities, and the market
for Municipal Obligations may be less liquid than the market for corporate debt
obligations. Municipal Obligations in which the Portfolio may invest include
special obligation bonds, lease obligations, participation certificates and
variable rate instruments. The market for these Municipal Obligations may be
less liquid than the market for general obligation Municipal Obligations.
Although the Portfolio's policy will generally be to hold Municipal Obligations
until their maturity, the relative illiquidity of some of the Portfolio's
securities may adversely affect the ability of the Portfolio to dispose of the
securities in a timely manner and at a fair price. The market for less liquid
securities tends to be more volatile than the market for more liquid securities
and market values of relatively illiquid securities may be more susceptible to
change as a result of adverse publicity and investor perceptions than are the
market values of more liquid securities. Although the issuer of certain
Municipal Obligations may be obligated to redeem the obligations at face value,
redemption could result in capital losses to the Portfolio to the extent that
the Municipal Obligations were purchased by the Portfolio at a premium to face
value.
Although the Municipal Obligations in which the Portfolio may invest will be,
at the time of investment, rated investment grade, municipal securities, like
other debt obligations, are subject to the risk of non-payment by their issuers.
The ability of issuers of Municipal Obligations to make timely payments of
interest and principal may be adversely affected in general economic downturns
and as relative governmental cost burdens are allocated and reallocated among
federal, state and local governmental units.
26
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GREENWICH STREET MUNICIPAL FUND INC.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Non-payment by an issuer would result in a reduction of income to the Portfolio,
and could result in a reduction in the value of the Municipal Obligations
experiencing non-payment and a potential decrease in the net asset value of the
Portfolio.
Issuers of Municipal Obligations may from time to time seek protection under
federal bankruptcy laws. In the event of bankruptcy of an issuer of a Municipal
Obligation it holds, the Portfolio could experience delays and limitations with
respect to the collection of principal and interest on the obligation, and the
Portfolio may not, in all circumstances, be able to collect all principal and
interest to which it is entitled. To enforce its rights in the event of a
default in the payment of interest or repayment of principal, or both, the
Portfolio may take possession of and manage the assets securing the issuer's
obligations on the securities, which may increase the Portfolio's operating
expenses and adversely affect the net asset value of the Portfolio. Any income
derived from the Portfolio's ownership or operation of these assets may not be
tax-exempt. In addition, the Portfolio's intention to qualify as a regulated
investment company under the Code may limit the extent to which the Portfolio
may exercise its rights by taking possession of the assets, because as a
regulated investment company the Portfolio is subject to certain limitations on
its investments and on the nature of its income. See "Taxation."
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest on them from federal income taxes are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Portfolio
nor the Investment Manager will review the procedures relating to the issuance
of Municipal Obligations or the basis for opinions of counsel.
Boston Advisors values the Portfolio's investments pursuant to guidelines
adopted and periodically reviewed by the Portfolio's Board of Directors. To the
extent that no established retail market exists for some of the securities in
which the Portfolio may invest, trading in the securities may be relatively
inactive and the ability of Boston Advisors to value the securities accurately
may be adversely affected. During periods of reduced market liquidity and in the
absence of readily available market quotations for Municipal Obligations held by
the Portfolio, the responsibility of Boston Advisors to value the Portfolio's
securities will become more difficult. Boston Advisors' judgment may play a
greater role in the valuation of the Portfolio's securities as a
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
result of the reduced availability of reliable objective data. To the extent
that the Portfolio invests in illiquid securities and securities that are
restricted as to resale, the Portfolio may incur additional risks and costs. The
sale of illiquid and restricted securities is particularly difficult.
The net asset value of the Common Stock will change with changes in the value
of the Portfolio's securities. Because the Portfolio will invest primarily in
fixed-income securities, the net asset value of the Common Stock can be expected
to change as levels of interest rates fluctuate; generally, when prevailing
interest rates increase, the value of fixed-income securities held by the
Portfolio can be expected to decrease and when prevailing interest rates
decrease, the value of the fixed-income securities held by the Portfolio can be
expected to increase. The value of the fixed-income securities held by the
Portfolio, and thus the Portfolio's net asset value, may also be affected by
other economic, market and credit factors.
POTENTIAL LEGISLATION. In past years, the U.S. Government has enacted various
laws that have restricted or diminished the income tax exemption on various
types of Municipal Obligations and may enact other similar laws in the future.
If any such laws are enacted that would reduce the availability of Municipal
Obligations for investment by the Portfolio so as to affect the Portfolio's
shareholders adversely, the Portfolio's Board of Directors will reevaluate the
Portfolio's investment objective and management policies and might submit
possible changes in the Portfolio's structure to the shareholders for their
consideration. If legislation was enacted that would treat a type of Municipal
Obligation as taxable for federal income tax purposes, the Portfolio would treat
the security as a permissible Taxable Investment within the applicable limits
described in this Prospectus.
UNRATED SECURITIES. The Portfolio may invest in unrated securities that the
Investment Manager determines to be of comparable quality to the rated
securities in which the Portfolio may invest. Dealers may not maintain daily
markets in unrated securities and retail secondary markets for many of them may
not exist. As a result, the Portfolio's ability to sell these securities when
the Investment Manager deems it appropriate may be diminished.
28
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GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
MUNICIPAL LEASES. Municipal leases in which the Portfolio may invest have
special risks not normally associated with Municipal Obligations. These
obligations frequently contain non-appropriation clauses that provide that the
governmental issuer of the obligation need not make future payments under the
lease or contract unless money is appropriated for that purpose by a legislative
body annually or on another periodic basis. Municipal leases have additional
risks because they represent a type of financing that has not yet developed the
depth of marketability generally associated with other Municipal Obligations.
Moreover, although a municipal lease typically will be secured by financed
equipment or facilities, the disposition of the equipment or facilities in the
event of foreclosure might prove difficult. In addition, in certain instances
the tax-exempt status of the municipal lease will not be subject to the legal
opinion of a nationally-recognized bond counsel, although in all cases the
Investment Manager will require that a municipal lease purchased by the
Portfolio be covered by a legal opinion to the effect that, as of the effective
date of the municipal lease, the lease is the valid and binding obligation of
the governmental issuer.
NON-PUBLICLY TRADED SECURITIES. As suggested above, the Portfolio may, from
time to time, invest a portion of its assets in non-publicly traded Municipal
Obligations. Non-publicly traded securities may be less liquid than publicly
traded securities. Although non-publicly traded securities may be resold in
privately negotiated transactions, the prices realized from these sales could be
less than those originally paid by the Portfolio.
REPURCHASE AGREEMENTS. In entering into a repurchase agreement, the Portfolio
will bear a risk of loss in the event that the other party to the transaction
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the underlying securities, including the
risk of a possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk of losing
all or a part of the income from the agreement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. Securities purchased on a
when-issued or delayed delivery basis may expose the Portfolio to risk because
the securities may experience fluctuations in value prior to their delivery.
Purchasing securities on a when-issued or delayed delivery basis can
29
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.
FINANCIAL FUTURES AND OPTIONS. Although the Portfolio intends to enter into
financial futures contracts and options on financial futures contracts that are
traded on a U.S. exchange or board of trade only if an active market exists for
those instruments, no assurance can be given that an active market will exist
for them at any particular time. If closing a futures position in anticipation
of adverse price movements is not possible, the Portfolio would be required to
make daily cash payments of variation margin. In those circumstances, an
increase in the value of the portion of the Portfolio's investments being
hedged, if any, may offset partially or completely losses on the futures
contract. No assurance can be given, however, that the price of the securities
being hedged will correlate with the price movements in a futures contract and,
thus, provide an offset to losses on the futures contract or option on the
futures contract. In addition, in light of the risk of an imperfect correlation
between securities held by the Portfolio that are the subject of a hedging
transaction and the futures or options used as a hedging device, the hedge may
not be fully effective because, for example, losses on the securities held by
the Portfolio may be in excess of gains on the futures contract or losses on the
futures contract may be in excess of gains on the securities held by the
Portfolio that were the subject of the hedge. In an effort to compensate for the
imperfect correlation of movement in the price of the securities being hedged
and movements in the price of futures contracts, the Portfolio may enter into
financial futures contracts or options on financial futures contracts in a
greater or lesser dollar amount than the dollar amount of the securities being
hedged if the historical volatility of the futures contract has been less or
greater than that of the securities. This "over hedging" or "under hedging" may
adversely affect the Portfolio's net investment results if market movements are
not as anticipated when the hedge is established.
If the Portfolio has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities it holds and rates decrease
instead, the Portfolio will lose part or all of the benefit of the increased
value of securities that it has hedged because it will have offsetting losses in
its futures or options positions. In addition, in those situations, if the
Portfolio has insufficient cash, it may have to sell securities to meet daily
30
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
variation margin requirements on the futures contracts at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices that reflect the decline in interest rates.
NON-DIVERSIFIED CLASSIFICATION. Investment in the Portfolio, which is
classified as a non-diversified fund under the 1940 Act, may present greater
risks to investors than an investment in a diversified fund. The investment
return on a non-diversified fund typically is dependent upon the performance of
a smaller number of securities relative to the number of securities held in a
diversified fund. The Portfolio's assumption of large positions in the
obligations of a small number of issuers will affect the value of the securities
it holds to a greater extent than that of a diversified fund in the event of
changes in the financial condition, or in the market's assessment, of the
issuers.
- --------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The Portfolio has adopted certain fundamental investment restrictions that may
not be changed without the prior approval of the holders of a majority of the
Portfolio's outstanding shares of Common Stock as defined in the 1940 Act. All
percentage limitations included in the investment restrictions below apply
immediately after a purchase or initial investment, and any subsequent change in
any applicable percentage resulting from market fluctuations will not require
the Portfolio to dispose of any security that it holds. Under its fundamental
restrictions, the Portfolio may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are described in this Prospectus.
2. Borrow money, except for temporary or emergency purposes, or for
clearance of transactions, and then only in amounts not exceeding 15% of its
total assets (not including the amount borrowed) and as otherwise described
in this Prospectus. When the Portfolio's borrowings exceed 5% of the value of
its total assets, the Portfolio will not make any additional investments.
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT RESTRICTIONS (CONTINUED)
3. Sell securities short or purchase securities on margin, except for
short-term credits as are necessary for the clearance of transactions, but
the Portfolio may make margin deposits in connection with transactions in
options, futures and options on futures.
4. Underwrite any issue of securities, except to the extent that the
purchase of Municipal Obligations may be deemed to be an underwriting.
5. Purchase, hold or deal in real estate or oil and gas interests, except
that the Portfolio may invest in Municipal Obligations secured by real estate
or interests in real estate.
6. Invest in commodities, except that the Portfolio may enter into
futures contracts, including those relating to indexes, and options on
futures contracts or indexes, as described in this Prospectus.
7. Lend any funds or other assets, except through purchasing Municipal
Obligations or Taxable Investments, lending securities and entering into
repurchase agreements consistent with the Portfolio's investment objective.
8. Issue senior securities.
9. Invest more than 25% of its total assets in the securities of issuers
in any single industry, except that this limitation will not be applicable to
the purchase of U.S. Government securities.
10. Make any investments for the purpose of exercising control or
management of any company.
- --------------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO
DIRECTORS AND OFFICERS
The business and affairs of the Portfolio, including the general supervision
of the duties performed by the Investment Manager under the Investment
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GREENWICH STREET MUNICIPAL FUND INC.
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MANAGEMENT OF THE PORTFOLIO (CONTINUED)
Management Agreement, are the responsibility of the Portfolio's Board of
Directors. The Directors and officers of the Portfolio, their addresses and
their principal occupations for at least the past five years are set forth
below:
<TABLE>
<S> <C> <C>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH THE PORTFOLIO DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
*+Heath B. McLendon Chairman of the Board Executive Vice President of
Two World Trade Center of Directors, Chief Smith Barney Shearson; Chairman
New York, NY 10048 Executive Officer and of the Board of Smith Barney
Director Shearson Investment Strategy
Advisers Inc.
Stephen J. Treadway President Executive Vice President of
1345 Ave. of the Smith Barney Shearson; Chairman
Americas of the Board, President and
New York, NY 10105 Chief Executive Officer of
Mutual Management Corp., and
Smith, Barney Advisers, Inc.,
investment advisory affiliates
of Smith Barney Shearson.
+Charles F. Barber Director Consultant; formerly Chairman
66 Glenwood Drive of the Board, ASARCO
Greenwich, CT 06830 Incorporated.
+Allan J. Bloostein Director Consultant; formerly Vice
27 West 67th Street Chairman of the Board of The
New York, NY 10023 May Department Stores Company;
Director of Crystal Brands,
Inc., Melville Corp., R.G.
Barry Corp. and Hechinger Co.
+Martin Brody Director Vice Chairman of the Board of
Three ADP Boulevard Directors of Restaurant
Roseland, NJ 07068 Associates Industries, Inc.; a
Director of Jaclyn, Inc.
+Dwight B. Crane Director Professor, Graduate School of
Harvard Business Business Administration,
School Harvard University.
Soldiers Field Road
Boston, MA 02163
</TABLE>
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO (CONTINUED)
<TABLE>
<S> <C> <C>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH THE PORTFOLIO DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
Richard P. Roelofs Executive Vice President of Smith Barney
Two World Trade Center President Shearson Investment Strategy
New York, NY 10048 Advisers Inc. and a Managing
Director of Smith Barney
Shearson.
Joseph P. Deane Vice President and Managing Director of Greenwich
Two World Trade Center Investment Officer Street Advisors.
New York, NY 10048
David Fare Investment Officer Vice President of Greenwich
Two World Trade Center Street Advisors. Prior to March
New York, NY 10048 1989, a senior portfolio
accountant with the firm of
Merrill Lynch, Pierce, Fenner &
Smith Inc., New York, New York.
Vincent Nave Chief Financial and Senior Vice President of Boston
Exchange Place Accounting Officer and Advisors and Boston Safe.
Boston, MA 02109 Treasurer
- -------------------------------------------------------------------------------
<FN>
*"Interested person" of the Portfolio as defined in the 1940 Act.
+Director, trustee and/or general partner of other investment companies
registered under the 1940 Act with which Smith Barney Shearson is affiliated.
</TABLE>
The Portfolio intends to pay each of its Directors who is not a director,
officer or employee of the Investment Manager or Boston Advisors, or any of
their affiliates, an annual fee of $5,000 plus $500 for each Board of Directors
meeting attended. In addition, the Portfolio will reimburse those Directors for
travel and out-of-pocket expenses incurred in connection with Board of Directors
meetings.
INVESTMENT MANAGER
Greenwich Street Advisors, a division of Mutual Management Corp., serves as
the Portfolio's investment manager. The Investment Manager provides investment
advisory and management services to investment companies affiliated with Smith
Barney Shearson. Mutual Management Corp. was incorporated in 1978 and currently
manages investment companies with total assets of approximately $50 billion at
March 31, 1994, of
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GREENWICH STREET MUNICIPAL FUND INC.
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MANAGEMENT OF THE PORTFOLIO (CONTINUED)
which $7.5 billion consisted of municipal bond portfolios. Mutual Management
Corp. is controlled by Smith Barney Shearson Holdings Inc., the parent company
of Smith Barney Shearson. Smith Barney Shearson Holdings Inc. is a direct
wholly-owned subsidiary of Travelers. Greenwich Street Advisors is located at
388 Greenwich Street, New York, New York 10013. Mutual Management Corp. is
located at 1345 Avenue of the Americas, New York, New York 10105.
Subject to the supervision and direction of the Portfolio's Board of
Directors, the Investment Manager manages the securities held by the Portfolio
in accordance with the Portfolio's stated investment objectives and policies,
makes investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs managers and securities
analysts who provide research services to the Portfolio. Mutual Management Corp.
provides certain administration services to the Portfolio, including overseeing
the Portfolio's non-investment operations and its relations with other service
providers and providing executive and other officers to the Portfolio. The
Portfolio pays the Investment Manager a Management Fee for the services provided
to the Fund that is computed daily and paid monthly at the annual rate of 0.90%
of the value of the Fund's average daily net assets, which is higher than the
rates for similar services paid by other recently organized publicly offered,
closed-end, management investment companies that have investment objectives and
policies similar to those of the Portfolio.
Joseph P. Deane, who is Vice President and Investment Officer of the
Portfolio, is primarily responsible for management of the Portfolio's assets.
Mr. Deane is a Managing Director of the Investment Manager and is the senior
asset manager for five investment companies and other accounts investing in
tax-exempt securities with aggregate assets of $3.2 billion as of March 31,
1994.
SUB-ADMINISTRATOR
Boston Advisors, located at One Boston Place, Boston, Massachusetts 02108,
serves as the Portfolio's sub-administrator pursuant to an agreement with Mutual
Management Corp. Boston Advisors is a wholly owned subsidiary of TBC, which is
in turn a wholly owned subsidiary of Mellon.
35
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GREENWICH STREET MUNICIPAL FUND INC.
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MANAGEMENT OF THE PORTFOLIO (CONTINUED)
Boston Advisors provides investment management, investment advisory and/ or
administrative services to investment companies that had aggregate assets under
management as of , 1994, in excess of $ billion.
Boston Advisors generally assists Mutual Management Corp. and it has primary
responsibility for statistical, accounting, bookkeeping and internal auditing
aspects of the Portfolio's administration and operation. For its services to the
Portfolio, the Investment Manager pays Boston Advisors a fee from its Management
Fee. Boston Advisors bears all expenses in connection with the performance of
its services.
The Investment Manager and Boston Advisors each bears all expenses in
connection with the performance of the services it provides to the Portfolio.
The Portfolio will bear all other expenses to be incurred in its operation,
including, but not limited to: the costs incurred in connection with the
Portfolio's organization; management fees; fees for necessary professional and
brokerage services; fees for any pricing service; the costs of regulatory
compliance; the costs associated with maintaining the Portfolio's corporate
existence; and costs of corresponding with the Portfolio's shareholders.
- --------------------------------------------------------------------
SECURITIES TRANSACTIONS AND TURNOVER
GENERAL
The Portfolio's securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases and
sales usually are placed with those dealers from which the Investment Manager
determines that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Portfolio for purchases and
sales undertaken through principal transactions, although the price paid usually
includes an undisclosed compensation to the dealer acting as agent. The prices
paid to underwriters of newly issued securities typically include a concession
paid by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked price.
36
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
SECURITIES TRANSACTIONS AND TURNOVER (CONTINUED)
Transactions on behalf of the Portfolio are allocated to various dealers by
the Investment Manager in its best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Investment Manager to supplement its own research
and analysis with the views and information of other securities firms.
Research services furnished by broker-dealers through which the Portfolio
effects securities transactions may be used by the Investment Manager in
managing other investment funds and accounts and, conversely, research services
furnished to the Investment Manager by broker-dealers in connection with other
funds and accounts the Investment Manager advises may be used by the Investment
Manager in advising the Portfolio. Although it is not possible to place a dollar
value on these services, the Investment Manager is of the view that the receipt
of the services should not reduce the overall costs of its research services.
Investment decisions for the Portfolio are made independently from those of
other investment companies or accounts managed by the Investment Manager. If
those investment companies or accounts are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time as the
Portfolio, however, available investments or opportunities for sales will be
allocated equitably to each client of the Investment Manager. In some cases,
this procedure may adversely affect the size of the position obtained for or
disposed of by the Portfolio or the price paid or received by the Portfolio.
The Portfolio's Board of Directors will review periodically the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits inuring to the
Portfolio. The Portfolio may, from time to time, in accordance with an exemptive
order granted by the SEC, enter into principal transactions involving certain
money market instruments with Smith Barney Shearson and certain Smith Barney
Shearson-affiliated dealers.
TURNOVER
The Portfolio cannot accurately predict its turnover rate, but anticipates
that its annual turnover rate will not exceed 100%. The Portfolio's turnover
37
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
SECURITIES TRANSACTIONS AND TURNOVER (CONTINUED)
rate is calculated by dividing the lesser of the Portfolio's sales or purchases
of securities during a year (excluding any security the maturity of which at the
time of acquisition is one year or less) by the average monthly value of the
Portfolio's securities for the year. Higher turnover rates can result in
corresponding increases in the Portfolio's transaction costs. The Portfolio will
not consider turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies.
- --------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN
The Portfolio expects to pay monthly dividends of net investment income (that
is, income (including its tax-exempt income and its accrued original issue
discount income) other than net realized capital gains) to the holders of the
Common Stock. Under the Portfolio's current policy, which may be changed at any
time by its Board of Directors, the Portfolio's monthly dividends will be made
at a level that reflects the past and projected performance of the Portfolio,
which policy over time will result in the distribution of all net investment
income of the Portfolio. Initial dividends to Common Stock shareholders are
expected to be declared approximately 60 days, and paid approximately 90 days,
from the completion of the Offering. Net income of the Portfolio consists of all
interest income accrued on the Portfolio's assets less all expenses of the
Portfolio. Expenses of the Portfolio are accrued each day. Net realized capital
gains, if any, will be distributed to the shareholders at least once a year.
Under the Portfolio's Dividend Reinvestment Plan (the "Plan"), a shareholder
whose shares of Common Stock are registered in his own name will have all
distributions from the Portfolio reinvested automatically by TSSG as agent under
the Plan, unless the shareholder elects to receive cash. Distributions with
respect to shares registered in the name of a broker-dealer or other nominee
(that is, in "Street Name") will be reinvested by the broker or nominee in
additional shares under the Plan, unless the service is not provided by the
broker or nominee or the shareholder elects to receive distributions in cash.
Investors who own Common Stock registered in Street Name should consult their
broker-dealers for details regarding reinvestment.
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DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN (CONTINUED)
All distributions to Portfolio shareholders who do not participate in the Plan
will be paid by check mailed directly to the record holder by or under the
direction of TSSG as dividend-paying agent.
If the Portfolio declares a dividend or capital gains distribution payable
either in shares of Common Stock or in cash, shareholders who are not Plan
participants will receive cash, and Plan participants will receive the
equivalent amount in shares of Common Stock. When the market price of the Common
Stock is equal to or exceeds the net asset value per share of the Common Stock
on the Valuation Date (as defined below), Plan participants will be issued
shares of Common Stock valued at the net asset value most recently determined as
described below under "Net Asset Value" or, if net asset value is less than 95%
of the then current market price of the Common Stock, then at 95% of the market
value. The Valuation Date is the record date or, if that date is not a NYSE
trading day, the immediately preceding trading day.
If the market price of the Common Stock is less than the net asset value of
the Common Stock, or if the Portfolio declares a dividend or capital gains
distribution payable only in cash, a broker-dealer not affiliated with Smith
Barney Shearson, as purchasing agent for Plan participants (the "Purchasing
Agent"), will buy Common Stock in the open market, on the NYSE or elsewhere, for
the participants' accounts. If, following the commencement of the purchases and
before the Purchasing Agent has completed its purchases, the market price
exceeds the net asset value of the Common Stock, the average per share purchase
price paid by the Purchasing Agent may exceed the net asset value of the Common
Stock, resulting in the acquisition of fewer shares than if the dividend or
capital gains distribution had been paid in Common Stock issued by the Portfolio
at net asset value. TSSG will apply all cash received as a dividend or capital
gains distribution to purchase Common Stock on the open market as soon as
practicable after the payment date of the dividend or capital gains
distribution, but in no event later than 30 days after that date, except when
necessary to comply with applicable provisions of the federal securities laws.
TSSG will maintain all shareholder accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by a shareholder for personal and tax records. The automatic reinvestment
of dividends and capital gains distributions will not relieve Plan
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DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN (CONTINUED)
participants of any income tax that may be payable on the dividends or capital
gains distributions. Common Stock in the account of each Plan participant will
be held by TSSG in uncertificated form in the name of the Plan participant, and
each shareholder's proxy will include those shares purchased pursuant to the
Plan.
Plan participants are subject to no charge for reinvesting dividends and
capital gains distributions. TSSG's fees for handling the reinvestment of
dividends and capital gains distributions will be paid by the Portfolio. No
brokerage charges apply with respect to shares of Common Stock issued directly
by the Portfolio as a result of dividends or capital gains distributions payable
either in Common Stock or in cash. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to open
market purchases made in connection with the reinvestment of dividends or
capital gains distributions.
Experience under the Plan may indicate that changes to it are desirable. The
Portfolio reserves the right to amend or terminate the Plan as applied to any
dividend or capital gains distribution paid subsequent to written notice of the
change sent to participants at least 30 days before the record date for the
dividend or capital gains distribution. The Plan also may be amended or
terminated by TSSG, with the Portfolio's prior written consent, on at least 30
days' written notice to Plan participants. All correspondence concerning the
Plan should be directed by mail to The Shareholders Services Group, Inc., One
Exchange Place, Boston, Massachusetts 02109 or by telephone at (617) 573-9300.
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NET ASSET VALUE
The net asset value of shares of the Common Stock will be calculated as of the
close of regular trading on the NYSE, currently 4:00 p.m., New York time, on
each day on which the NYSE is open for trading. The Portfolio reserves the right
to cause its net asset value to be calculated on a less frequent basis as
determined by the Portfolio's Board of Directors. For purposes of determining
net asset value, futures contracts and options on futures contracts will be
valued 15 minutes after the close of regular trading on the NYSE.
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NET ASSET VALUE (CONTINUED)
Net asset value per share of Common Stock is calculated by dividing the value
of the Portfolio's total assets less liabilities. In general, the Portfolio's
investments will be valued at market value, or in the absence of market value,
at fair value as determined by or under the direction of the Portfolio's Board
of Directors. Short-term investments that mature in 60 days or less are valued
on the basis of amortized cost (which involves valuing an investment at its cost
and, thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the effect of fluctuating interest rates on the market
value of the investment) when the Board of Directors has determined that
amortized cost represents fair value.
The valuation of the Portfolio's assets is made by Boston Advisors after
consultation with an independent pricing service (the "Service") approved by the
Portfolio's Board of Directors. When, in the judgment of the Service, quoted bid
prices for investments are readily available and are representative of the bid
side of the market, these investments are valued at the mean between the quoted
bid prices and asked prices. Investments for which, in the judgment of the
Service, no readily obtainable market quotation is available, are carried at
fair value as determined by the Service, based on methods that include
consideration of: yields or prices of Municipal Obligations of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. The Service may use electronic data processing
techniques and/or a matrix system to determine valuations. The procedures of the
Service are reviewed periodically by the officers of the Portfolio under the
general supervision and responsibility of the Board of Directors, which may
replace the Service at any time if it determines it to be in the best interests
of the Portfolio to do so.
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TAXATION
The discussion set out below of tax considerations generally affecting the
Portfolio and its shareholders is intended to be only a summary and is not
intended as a substitute for careful tax planning by prospective shareholders.
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TAXATION (CONTINUED)
TAXATION OF THE PORTFOLIO AND ITS INVESTMENTS
The Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Code. In addition, the Portfolio intends to satisfy
conditions contained in the Code that will enable interest from Municipal
Obligations, excluded from gross income for federal income tax purposes with
respect to the Portfolio, to retain that tax-exempt status when distributed to
the shareholders of the Portfolio (that is, to be classified as
"exempt-interest" dividends of the Portfolio).
If it qualifies as a regulated investment company, the Portfolio will pay no
federal income taxes on its taxable net investment income (that is, taxable
income other than net realized capital gains) and its net realized capital gains
that are distributed to shareholders. To qualify under Subchapter M of the Code,
the Portfolio must, among other things: (1) distribute to its shareholders at
least 90% of its taxable net investment income (for this purpose consisting of
taxable net investment income and net realized short-term capital gains) and 90%
of its tax-exempt net investment income (reduced by certain expenses); (2)
derive at least 90% of its gross income from dividends, interest, payments with
respect to loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from options,
futures, and forward contracts) derived with respect to the Portfolio's business
of investing in securities; (3) derive less than 30% of its annual gross income
from the sale or other disposition of securities, options, futures or forward
contracts held for less than three months; and (4) diversify its holdings so
that, at the end of each fiscal quarter of the Portfolio (a) at least 50% of the
market value of the Portfolio's assets is represented by cash, U.S. Government
securities and securities of other regulated investment companies, and other
securities, with those other securities limited, with respect to any one issuer,
to an amount no greater than 5% of the Portfolio's assets and (b) not more than
25% of the market value of the Portfolio's assets is invested in the securities
of any one issuer (other than U.S. Government securities or securities of other
regulated investment companies) or of two or more issuers that the Portfolio
controls and that are determined to be in the same or similar trades or
businesses or related trades or businesses. In meeting these requirements, the
Portfolio may be restricted in the selling of securities held by the Portfolio
for less than three months and in the utilization of certain of the investment
techniques described above under "Investment Objective and Management
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TAXATION (CONTINUED)
Policies -- Investment Techniques." As a regulated investment company, the
Portfolio will be subject to a 4% non-deductible excise tax measured with
respect to certain undistributed amounts of ordinary income and capital gain.
The Portfolio expects to pay dividends and distributions necessary to avoid the
application of this excise tax.
Legislation currently pending before the U.S. Congress would repeal the
requirement contained in Subchapter M of the Code that a regulated investment
company must derive less than 30% of its gross income from the sale or other
disposition of assets described above that are held for less than three months.
It is unclear at this time whether this legislation will become law and, if it
is so enacted, the form it will take.
As described above, the Portfolio may invest in financial futures contracts
and options on financial futures contracts that are traded on a U.S. exchange or
board of trade. The Portfolio anticipates that these investment activities will
not prevent the Portfolio from qualifying as a regulated investment company. As
a general rule, these investment activities will increase or decrease the amount
of long-term and short-term capital gains or losses realized by the Portfolio
and, thus, will affect the amount of capital gains distributed to the
Portfolio's shareholders.
For federal income tax purposes, gain or loss on the futures and options
described above (collectively referred to as "Section 1256 Contracts") would, as
a general rule, be taxed pursuant to a special "mark-to-market system." Under
the mark-to-market system, the Portfolio may be treated as realizing a greater
or lesser amount of gains or losses than actually realized. As a general rule,
gain or loss on Section 1256 Contracts is treated as 60% long-term capital gain
or loss and 40% short-term capital gain or loss, and as a result, the
mark-to-market system will generally affect the amount of capital gains or
losses taxable to the Portfolio and the amount of distributions taxable to a
shareholder. Moreover, if the Portfolio invests in both Section 1256 Contracts
and offsetting positions in those contracts, then the Portfolio might not be
able to receive the benefit of certain realized losses for an indeterminate
period of time. The Portfolio expects that its activities with respect to
Section 1256 Contracts and offsetting positions in those Contracts (1) will not
cause it or its shareholders to be treated as receiving a
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TAXATION (CONTINUED)
materially greater amount of capital gains or distributions than actually
realized or received and (2) will permit it to use substantially all of its
losses for the fiscal years in which the losses actually occur.
TAXATION OF THE PORTFOLIO'S SHAREHOLDERS
The Portfolio anticipates that all dividends it pays, other than dividends
from Taxable Investments and from income or gain derived from securities
transactions and from the use of certain of the investment techniques described
under "Investment Objective and Management Policies -- Investment Techniques,"
will be derived from interest on Municipal Obligations and thus will be
exempt-interest dividends that may be excluded by shareholders from their gross
income for federal income tax purposes if the Portfolio satisfies certain asset
percentage requirements. Dividends paid from the Portfolio's net investment
income and distributions of the Portfolio's net realized short-term capital
gains are taxable to shareholders of the Portfolio as ordinary income,
regardless of the length of time shareholders have held shares of Common Stock
and whether the dividends or distributions are received in cash or reinvested in
additional shares. As a general rule, a shareholder's gain or loss on a sale of
his shares of Common Stock will be a long-term gain or loss if he has held his
shares for more than one year and will be a short-term capital gain or loss if
he has held his shares for one year or less. Dividends and distributions paid by
the Portfolio will not qualify for the federal dividends-received deduction for
corporations.
EXEMPT-INTEREST DIVIDENDS
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of Common Stock is not deductible for federal income tax purposes. If a
shareholder receives exempt-interest dividends with respect to any share of
Common Stock and if the share is held by the shareholder for six months or less,
then any loss on the sale of the share may, to the extent of the exempt-interest
dividends, be disallowed. The Code may also require a shareholder, if he
receives exempt-interest dividends, to treat as taxable income a portion of
certain otherwise non-taxable social security and railroad retirement benefit
payments. In addition, the portion of any exempt-interest dividend paid by the
Portfolio that represents income derived from private activity bonds held by the
Portfolio may not retain its tax-exempt status in the hands of a shareholder who
is a "substantial user" of a facility
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TAXATION (CONTINUED)
financed by the bonds, or a "related person" of the substantial user. Although
the Portfolio's exempt-interest dividends may be excluded by shareholders from
their gross income for federal income tax purposes (1) some or all of the
Portfolio's exempt-interest dividends may be a specific preference item, or a
component of an adjustment item, for purposes of the federal individual and
corporate alternative minimum taxes and (2) the receipt of dividends and
distributions from the Portfolio may affect a corporate shareholder's federal
"environmental" tax liability. The receipt of dividends and distributions from
the Portfolio may affect a foreign corporate shareholder's federal "branch
profits" tax liability and the federal "excess net passive income" tax liability
of a shareholder of an S corporation. Shareholders should consult their own tax
advisors to determine whether they are (1) "substantial users" with respect to a
facility or "related" to those users within the meaning of the Code or (2)
subject to a federal alternative minimum tax, the federal "environmental" tax,
the federal "branch profits" tax, or the federal "excess net passive income"
tax.
TAX-EXEMPT INCOME VS. TAXABLE INCOME
The tables set out in Appendix B to this Prospectus show individual taxpayers
how to translate the tax savings from investments such as the Portfolio into an
equivalent return from a taxable investment. The yields used in the tables are
for illustration only and are not intended to represent current or future yields
for the Portfolio, which may be higher or lower than those shown.
DIVIDEND REINVESTMENT PLAN
A shareholder of the Portfolio receiving dividends or distributions in
additional shares pursuant to the Plan should be treated for federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that a shareholder receiving cash dividends or distributions receives, and
should have a cost basis in the shares received equal to that amount.
STATEMENTS AND NOTICES
Statements as to the tax status of the dividends and distributions received by
shareholders of the Portfolio are mailed annually. These statements show
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TAXATION (CONTINUED)
the dollar amount of income excluded from federal income taxes and the dollar
amount, if any, subject to federal income taxes. The statements will also
designate the amount of exempt-interest dividends that are a specific preference
item for purposes of the federal individual and corporate alternative minimum
taxes and will indicate the shareholder's share of the investment expense of the
Portfolio. The Portfolio will notify shareholders annually as to the interest
excluded from federal income taxes earned by the Portfolio with respect to those
states and possessions in which the Portfolio has or had investments. The dollar
amount of dividends paid by the Portfolio that is excluded from federal income
taxation and the dollar amount of dividends paid by the Portfolio that is
subject to federal income taxation, if any, will vary for each shareholder
depending upon the size and duration of the shareholder's investment in the
Portfolio. To the extent that the Portfolio earns taxable net investment income,
it intends to designate as taxable dividends the same percentage of each day's
dividend as its taxable net investment income bears to its total net investment
income earned on that date. Therefore, the percentage of each day's dividend
designated as taxable, if any, may vary from day to day.
BACKUP WITHHOLDING
If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income, or fails to certify that he
has provided a correct taxpayer identification number and that he is not subject
to "backup withholding," the shareholder may be subject to a 31% "backup
withholding" tax with respect to (1) taxable dividends and distributions and (2)
the proceeds of any sales or repurchases of shares of Common Stock. An
individual's taxpayer identification number is his social security number. The
31% backup withholding tax is not an additional tax and may be credited against
a taxpayer's federal income tax liability.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Portfolio is authorized to issue up to 500,000,000 shares of Common Stock,
par value $.001 per share. All shares of Common Stock have equal
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DESCRIPTION OF CAPITAL STOCK (CONTINUED)
non-cumulative voting rights and equal rights with respect to dividends, assets
and liquidation. Shares of Common Stock will be fully paid and non-assessable
when issued and have no preemptive, conversion or exchange rights.
PRINCIPAL SHAREHOLDER
As of the date of this Prospectus, Smith Barney Shearson was the record and
beneficial owner of all of the outstanding shares of Common Stock and thus was
deemed to "control" the Portfolio as that term is defined in the 1940 Act. The
shares held by Smith Barney Shearson are intended to enable the Portfolio to
meet an initial capitalization requirement imposed under the 1940 Act. Smith
Barney Shearson has undertaken that the shares were purchased for investment
purposes only and that they will be sold only pursuant to a registration
statement under the Securities Act of 1933, as amended (the "1933 Act") or an
applicable exemption from the registration requirements of the 1933 Act.
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PURCHASE OF SHARES
GENERAL
Common Stock will be made available during the Offering through Smith Barney
Shearson as underwriter. The public offering price for the Common Stock during
the Offering is $12.00 per share, and the minimum purchase during the Offering
is 100 shares of Common Stock ($1,200). The Common Stock will be sold during the
Offering subject to no sales charges or underwriting discounts, but Smith Barney
Shearson Financial Consultants will receive compensation from Smith Barney
Shearson in connection with sales of Common Stock during the Offering.
No market has existed for the Common Stock prior to the Offering. The Common
Stock has been approved for listing on the NYSE under the symbol "GSI." Trading
in the Common Stock on the NYSE will not begin, however, until a date within 30
days of the date of this Prospectus. Smith Barney Shearson does not intend to
make a market in the Common Stock during the period in which the Common Stock is
not traded on the NYSE.
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PURCHASE OF SHARES (CONTINUED)
As a result, during that period, an investment in the Common Stock should be
considered illiquid. Purchases of shares on the NYSE will be subject to payment
of customary brokerage commissions.
In order to meet the requirements for listing of shares of the Common Stock on
the NYSE, Smith Barney Shearson will undertake to sell lots of 100 or more
shares to a minimum of 2,000 beneficial owners in the United States. During the
period in which Smith Barney Shearson will be soliciting indications of interest
with respect to the Common Stock, the Portfolio and Smith Barney Shearson will
evaluate the market for the Common Stock as well as the market for the
Portfolio's contemplated investments. If changes in existing market and other
conditions make it impractical or inadvisable to proceed with the Offering, the
Offering will not be made.
Smith Barney Shearson intends to make a market in the Common Stock after
trading in the Common Stock has commenced on the NYSE. Smith Barney Shearson,
however, is not obligated to conduct market-making activities and any such
activities may be discontinued at any time without notice, at the sole
discretion of Smith Barney Shearson. No assurance can be given as to the
liquidity of, or the trading market for, the Common Stock as a result of any
market-making activities undertaken by Smith Barney Shearson. This Prospectus is
to be used by Smith Barney Shearson in connection with the Offering and with
offers and sales of the Common Stock in market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of the sale.
Smith Barney Shearson may take certain actions to discourage short-term
trading of Common Stock during a period of time following the effectiveness of
the listing of the Common Stock for trading on the NYSE. During any such period,
for example, physical delivery of certificates representing Common Stock may be
required to transfer ownership of Common Stock.
UNDERWRITING
Under an underwriting agreement dated as of , 1994 (the
"Underwriting Agreement") between the Portfolio and Smith Barney Shearson,
Shearson will serve as the underwriter of the Common Stock. Compensation
received by Smith Barney Shearson Financial Consultants in connection with the
sale of Common Stock during the Offering will be from Smith Barney Shearson's
own assets and not from the Portfolio's assets.
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PURCHASE OF SHARES (CONTINUED)
Smith Barney Shearson has agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase from the Portfolio, and the Portfolio has
agreed to sell to Smith Barney Shearson 5,000,000 shares of Common Stock (the
"Firm Shares"). The Portfolio has also granted Smith Barney Shearson an option,
exercisable for 60 days after the date of this Prospectus, to purchase up to
750,000 additional shares of Common Stock to cover over-allotments, if any, at a
price equal to the public offering price for the Common Stock during the
offering. The Underwriting Agreement provides that, if any of the Firm Shares
are purchased by Smith Barney Shearson, all must be so purchased, and that the
obligations of Smith Barney Shearson under the Underwriting Agreement are
subject to various conditions. Under the terms of the Underwriting Agreement,
the Portfolio has agreed to indemnify Smith Barney Shearson against certain
liabilities, including certain liabilities under the 1933 Act.
SMITH BARNEY SHEARSON
Smith Barney Shearson, located at 1345 Avenue of the Americas, New York, New
York 10105, is a wholly owned subsidiary of Smith Barney Shearson Holdings Inc.
("Holdings"). All of the issued and outstanding common stock of Holdings is held
by Travelers. Smith Barney Shearson is one of the leading full-line investment
firms serving the U.S. and foreign securities and commodities markets.
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
The Portfolio's Articles of Incorporation include provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Portfolio or to change the composition of its Board of Directors
and could have the effect of depriving shareholders of an opportunity to sell
their shares of Common Stock at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of the Portfolio.
Commencing with the first annual meeting of shareholders, the Board of Directors
will be divided into three classes. At the annual meeting of shareholders in
each year thereafter, the term of one class will expire and each Director
elected to the class will hold office for a term of three years. The
classification of the Board of Directors in this manner
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
could delay for up to two years the replacement of a majority of the Board. The
Articles of Incorporation provide that the maximum number of Directors that may
constitute the Portfolio's entire board is 12. A Director may be removed from
office, or the maximum number of Directors increased, only by vote of the
holders of at least 75% of the shares of Common Stock entitled to be voted on
the matter.
The Portfolio's Articles of Incorporation require the favorable vote of the
holders of at least two-thirds of the shares of Common Stock then entitled to be
voted to authorize the conversion of the Portfolio from a closed-end to an
open-end investment company as defined in the 1940 Act, unless two-thirds of the
Continuing Directors (as defined below) approve such a conversion. In the latter
case, the affirmative vote of a majority of the shares outstanding will be
required to approve the amendment to the Portfolio's Articles of Incorporation
providing for the conversion of the Portfolio.
The affirmative votes of at least 75% of the Directors and the holders of at
least 75% of the shares of the Portfolio are required to authorize any of the
following transactions (referred to individually as a "Business Combination"):
(1) a merger, consolidation or share exchange of the Portfolio with or into any
other person (referred to individually as a "Reorganization Transaction"); (2)
the issuance or transfer by the Portfolio (in one or a series of transactions in
any 12-month period) of any securities of the Portfolio to any other person or
entity for cash, securities or other property (or combination thereof) having an
aggregate fair market value of $1,000,000 or more, excluding sales of securities
of the Portfolio in connection with a public offering, issuances of securities
of the Portfolio pursuant to a dividend reinvestment plan adopted by the
Portfolio and issuances of securities of the Portfolio upon the exercise of any
stock subscription rights distributed by the Portfolio; (3) a sale, lease,
exchange, mortgage, pledge, transfer or other disposition by the Portfolio (in
one or a series of transactions in any 12-month period) to or with any person of
any assets of the Portfolio having an aggregate fair market value of $1,000,000
or more, except for transactions in securities effected by the Portfolio in the
ordinary course of its business (each such sale, lease, exchange, mortgage,
pledge, transfer or other disposition being referred to individually as a
"Transfer Transaction"). The same affirmative votes are required with respect
to: any proposal as to the voluntary liquidation or dissolution of the Portfolio
or any amendment to the Portfolio's Articles of Incorporation to terminate its
existence (referred
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
to individually as a "Termination Transaction"); and any shareholder proposal as
to specific investment decisions made or to be made with respect to the
Portfolio's assets.
A 75% shareholder vote will not be required with respect to a Business
Combination if the transaction is approved by a vote of at least 75% of the
Continuing Directors (as defined below) or if certain conditions regarding the
consideration paid by the person entering into, or proposing to enter into, a
Business Combination with the Portfolio and various other requirements are
satisfied. In such case, a majority of the votes entitled to be cast by
shareholders of the Portfolio will be required to approve the transaction if it
is a Reorganization Transaction or a Transfer Transaction that involves
substantially all of the Portfolio's assets and no shareholder vote will be
required to approve the transaction if it is any other Business Combination. In
addition, a 75% shareholder vote will not be required with respect to a
Termination Transaction if it is approved by a vote of at least 75% of the
Continuing Directors, in which case a majority of the votes entitled to be cast
by shareholders of the Portfolio will be required to approve the transaction.
The voting provisions described above could have the effect of depriving
shareholders of the Portfolio of an opportunity to sell their Common Stock at a
premium over prevailing market prices by discouraging a third party from seeking
to obtain control of the Portfolio in a tender offer or similar transaction. In
the view of the Portfolio's Board of Directors, however, these provisions offer
several possible advantages, including: (1) requiring persons seeking control of
the Portfolio to negotiate with its management regarding the price to be paid
for the amount of Common Stock required to obtain control; (2) promoting
continuity and stability; and (3) enhancing the Portfolio's ability to pursue
long-term strategies that are consistent with its investment objective and
management policies. The Board of Directors has determined that the voting
requirements described above, which are generally greater than the minimum
requirements under Maryland law and the 1940 Act, are in the best interests of
shareholders generally.
A "Continuing Director," as used in the discussion above, is any member of the
Portfolio's Board of Directors (1) who is not a person or affiliate of a person
who enters or proposes to enter into a Business Combination with the Portfolio
(such a person or affiliate being referred to individually as an
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
"Interested Party") and (2) who has been a member of the Board of Directors for
a period of at least 12 months (or since the commencement of the Portfolio's
operations, if less than 12 months), or is a successor of a Continuing Director
who is unaffiliated with an Interested Party and is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then members of
the Board of Directors.
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CUSTODIAN, TRANSFER, AND DIVIDEND-PAYING AGENT, REGISTRAR AND PLAN AGENT
Boston Safe, located at One Boston Place, Boston, Massachusetts 02108, acts as
custodian of the Portfolio's investments. TSSG, located at One Exchange Place,
Boston, Massachusetts 02109, serves as the Portfolio's transfer agent,
dividend-paying agent and registrar. TSSG also serves as agent in connection
with the Plan.
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LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus will be
passed on for the Portfolio by Willkie Farr & Gallagher, New York, New York.
Willkie Farr & Gallagher serves as counsel to Smith Barney Shearson.
- --------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
The Portfolio will send unaudited semi-annual and audited annual reports to
the holders of its securities, including a list of investments held.
- --------------------------------------------------------------------
EXPERTS
The financial statement of the Portfolio contained in this Prospectus has been
included in reliance on the report of Coopers & Lybrand, independent
accountants, as experts in auditing and accounting.
52
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
FURTHER INFORMATION
This Prospectus does not contain all of the information included in the
Registration Statement filed with the SEC under the 1933 Act and the 1940 Act
with respect to the Common Stock offered by this Prospectus, certain portions of
which Registration Statement have been omitted pursuant to the rules and
regulations of the SEC. The Registration Statement, including exhibits filed
with the Registration Statement, may be examined at the office of the SEC in
Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and, in each instance,
reference is made to the copy of the contract or other document filed as an
exhibit to the Registration Statement, of which this Prospectus forms a part,
each such statement's being qualified in all respects by the reference.
-------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE PORTFOLIO, THE PORTFOLIO'S INVESTMENT MANAGER OR SMITH BARNEY SHEARSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
THE OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER WILL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PORTFOLIO SINCE
THE DATE OF THIS PROSPECTUS. IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS
IS REQUIRED BY LAW TO BE DELIVERED, HOWEVER, THIS PROSPECTUS WILL BE
SUPPLEMENTED OR AMENDED ACCORDINGLY.
53
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDER AND DIRECTORS OF
GREENWICH STREET MUNICIPAL FUND INC.:
We have audited the accompanying statement of assets and liabilities of
Greenwich Street Municipal Fund Inc. (the "Portfolio") as of June , 1994. This
financial statement is the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of assets and liabilities. Our
procedures included confirmation of cash held by the custodian as of June ,
1994. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Greenwich
Street Municipal Fund Inc. as of June , 1994 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
June , 1994
54
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES As of June , 1994
<TABLE>
<S> <C>
ASSETS
Cash $
Deferred offering expenses (Note 2)
- ----------------------------------------------------------------------------
TOTAL ASSETS
- ----------------------------------------------------------------------------
LIABILITIES
Accrued offering expenses (Note 2)
- ----------------------------------------------------------------------------
NET ASSETS, applicable to shares of common stock issued and
outstanding
- ----------------------------------------------------------------------------
NET ASSET VALUE per share ($ divided by shares of common
stock outstanding) $
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of this statement.
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
(1) Greenwich Street Municipal Fund Inc. (the "Portfolio") was organized on
February 19, 1993 under the laws of the State of Maryland and is registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The Portfolio has had no
operations other than organizational matters and the issuance and sale of
shares of Common Stock on June , 1994 to Smith Barney Shearson Inc.
(2) Costs relating to the public offering of the Portfolio's shares of Common
Stock will be payable from the proceeds of the offering and charged to
capital at the time of the issuance of the shares.
55
<PAGE>
[This page intentionally left blank]
56
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
APPENDIX A
DESCRIPTION OF MOODY'S, S&P AND FITCH RATINGS
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS:
AAA Bonds that are rated Aaa are judged to be of the best quality, carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments with respect to these bonds are protected by a large or
by an exceptionally stable margin, and principal is secure. Although the various
protective elements applicable to these bonds are likely to change, those
changes are most unlikely to impair the fundamentally strong position of these
bonds.
AA Bonds that are rated Aa are judged to be of high quality by all
standards and together with the Aaa group comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or other elements may be
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest with respect to these bonds are considered adequate,
but elements may be present that suggest a susceptibility to impairment sometime
in the future.
BAA Bonds rated Baa are considered to be medium grade obligations, that is
they are neither highly protected nor poorly secured. Interest payment and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. These bonds lack outstanding investment characteristics and may
have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
A-1
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS:
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG) and for variable demand obligations
are designated Variable Moody's Investment Grade (VMIG). This distinction
recognizes the differences between short-term credit risk and long-term risk.
Loans bearing the designation MIG 1/VMIG 1 are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
Loans bearing the designation MIG 2/VMIG 2 are of high quality, with margins of
protection ample, although not as large as the preceding group. Loans bearing
the designation MIG 3/VMIG 3 are of favorable quality, with all security
elements accounted for but lacking the undeniable strength of the preceding
grades. Market access for refinancing, in particular, is likely to be less well
established.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations,
normally evidenced by many of the characteristics of issuers rated Prime-1 but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
DESCRIPTION OF S&P MUNICIPAL BOND RATINGS:
AAA These bonds are the obligations of the highest quality and have the
strongest capacity for timely payment of debt service.
GENERAL OBLIGATION BONDS RATED AAA In a period of economic stress, the issuers
of these bonds will suffer the smallest declines in income and will be least
susceptible to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure requirements.
Quality of management appears superior.
A-2
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
REVENUE BONDS RATED AAA Debt service coverage with respect to these bonds has
been, and is expected to remain, substantial. Stability of the pledged revenues
is also exceptionally strong due to the competitive position of the municipal
enterprise or to the nature of the revenues. Basic security provisions
(including rate covenant, earnings test for issuance of additional bonds, debt
service reserve requirements) are rigorous. There is evidence of superior
management.
AA The investment characteristics of bonds in this group are only slightly
less marked than those of the prime quality issues. Bonds rated AA have the
second strongest capacity for payment of debt service.
A Principal and interest payments on bonds in this category are regarded as
safe although the bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories. This rating describes the third strongest capacity for payment of
debt service.
GENERAL OBLIGATION BONDS RATED A -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
REVENUE BONDS RATED A -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appearance appears adequate.
BBB The bonds in this group are regarded as having an adequate capacity to
pay interest and repay principal. Whereas bonds in this group normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. Bonds
rated BBB have the fourth strongest capacity for payment of debt service.
A-3
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA category.
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS:
Municipal notes with maturities of three years or less are usually given note
ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have a satisfactory capacity to pay principal and interest.
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
Capacity for timely payment on commercial paper rated A-2 is strong, but the
relative degree of safety is not as high as for issues designated A-1.
DESCRIPTION OF FITCH MUNICIPAL BOND RATINGS:
AAA Bonds rated AAA by Fitch are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA Bonds rated AA by Fitch are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issues
is generally rated F-1+ by Fitch.
A Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
A-4
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
BBB Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position of a
credit within a rating category. Plus and minus signs, however, are not used in
the AAA category.
DESCRIPTION OF FITCH SHORT-TERM RATINGS:
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch's short-term ratings are as follows:
F-1+ Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
F-1 Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2 Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.
F-3 Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term adverse
changes could cause these securities to be rated below investment grade.
LOC The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
A-5
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
APPENDIX B
TAX-EXEMPT INCOME COMPARED TO TAXABLE INCOME
In August 1993 the United States Congress passed the Revenue Reconciliation
Act of 1993 which increased the top federal income tax bracket to 36 percent.
For taxpayers with adjusted incomes in excess of $250,000 a surcharge of ten
percent was added, and thus these taxpayers have a top bracket of 39.6 percent.
For many Americans the new rates mean higher taxes at a time when the
tax-advantaged status of many investments has been eliminated. One simple and
liquid investment that has retained its tax-exempt status is municipal bonds.
Because the interest they pay is exempt from federal income taxes, and in some
cases state and local taxes, municipal bonds can allow investors to realize
higher effective yields than investments in taxable instruments having the same
stated interest rate.
The tables below show individual taxpayers how to translate the tax savings
from investments such as the Portfolio into an equivalent return from a taxable
investment. The yields used below are for illustration only and are not intended
to represent current or future yields for the Portfolio, which may be higher or
lower than those shown.
<TABLE>
<CAPTION>
FEDERAL
SAMPLE TAXABLE MARGINAL TAX-EXEMPT YIELDS
INCOME RATE* 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50%
----------------- ---------- ------- ------- ------- ------- ------- -------- -------- -------- -------- --------
EQUIVALENT TAXABLE YIELD
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SINGLE RETURN
-----------------
$0-$22,750 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00%
$22,751-$55,100 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11% 11.81%
$55,101-$115,000 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59% 12.32%
$115,001-$250,000 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.50% 13.28%
over $250,000 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25% 14.07%
<CAPTION>
JOINT RETURN
-----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$38,000 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00%
$38,001-$91,850 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11% 11.81%
$91,851-$140,000 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59% 12.32%
$140,001-$250,000 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.50% 13.28%
over $250,000 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25% 14.07%
<FN>
- ------------------------------
* The federal tax rates shown are those currently in effect for 1994 and are
subject to change. The calculations reflected in the table assume that
</TABLE>
B-1
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX B (CONTINUED)
no income will be subject to any federal, state or local individual
alternative minimum taxes. The rate brackets are subject to adjustment for
the Internal Revenue Service inflation indexation. Income may be subject to
state and local taxes, and a portion of the Portfolio's income may be a
preference item for purposes of the federal alternative minimum tax. Capital
gains, if any, will be subject to capital gains taxes.
B-2
<PAGE>
GREENWICH STREET
MUNICIPAL FUND INC.
COMMON STOCK
Two World Trade Center
New York, New York 10048
FD0172 E2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Financial Statements
<TABLE>
<S> <C> <C> <C>
Parts A and B
(a) -- Greenwich Street Municipal Fund Inc. Statement of
Assets and Liabilities.***
(b) -- Report of Independent Accountants.***
Part C -- None.
</TABLE>
(2) Exhibits
<TABLE>
<S> <C> <C> <C>
(a) (1) -- Articles of Incorporation of Registrant.*
(2) -- Articles of Amendment.**
(b) -- By-Laws of Registrant.*
(c) -- Not applicable.
(d) -- Form of Specimen certificate representing shares
of Common Stock, par value $.001 per share.***
(e) -- Registrant's Dividend Reinvestment Plan.
(f) -- Not applicable.
(g) (1) -- Form of Investment Advisory Agreement.
(2) -- Form of Administration Agreement.***
(h) (1) -- Form of Purchase Agreement.
(2) -- Form of Underwriting Agreement.
(i) -- Not applicable.
(j) (1) -- Form of Custody Agreement.
(2) -- Form of Transfer Agency and Registrar Agreement.
(k) -- Not applicable.
(l) (1) -- Opinion and consent of Willkie Farr &
Gallagher.***
(2) -- Opinion and consent of Venable, Baetjer and
Howard.***
(m) -- Not applicable.
(n) -- Opinion and consent of Coopers & Lybrand.***
(o) -- Not applicable.
(p) -- Not applicable.
(q) -- Not applicable.
</TABLE>
ITEM 25. MARKETING ARRANGEMENTS
See the Forms of Purchase Agreement and Underwriting Agreement filed as
Exhibits (h)(1) and (2).
- ------------------------
*Incorporated by reference to Registrant's initial Registration Statement
filed with the Commission on February 19, 1993.
**Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement, filed with the Commission on April 19, 1994.
***To be filed by amendment.
II-1
<PAGE>
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses expected to be
incurred in connection with the offering described in this Registration
Statement:
<TABLE>
<S> <C>
SEC Registration fees............................. $22,562.50
National Association of Securities Dealers, Inc.
fees............................................. $ 7,400.00
New York Stock Exchange listing fee............... $ ***
Printing (other than stock certificates) and
related delivery expenses........................ $ ***
Engraving and printing stock certificates......... $ ***
Fees and expenses of qualification under state
securities laws (including fees of counsel)...... $ ***
Legal fees and expenses........................... $ ***
Travel and related out-of-pocket expenses and
miscellaneous.................................... $ ***
Total......................................... $ ***
----------
----------
<FN>
- ------------------------
***To be supplied by amendment.
</TABLE>
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
The number of record holders of Registrant as of June , 1993 is as
follows:
(1) Title of Class:
Common Stock, $.001 par value
(2) Number of Record Holders:
ITEM 29. INDEMNIFICATION
Under Article Seventh of Registrant's Articles of Incorporation, any past or
present director or officer of Registrant is indemnified to the fullest extent
permitted by the Maryland General Corporation Law ("MGCL") against liability and
all expenses reasonably incurred by him in connection with any action, suit or
proceeding to which he may be a party or otherwise involved by reason of his
being or having been a Director or officer of Registrant. This provision does
not authorize indemnification when it is determined that the Director or officer
would otherwise be liable to Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
Expenses may be paid by Registrant to its currently acting and its former
Directors and officers, to the fullest extent that indemnification of directors
is permitted by the MGCL, the 1933 Act and the 1940 Act, in advance of the final
disposition of any action, suit or proceeding. The Board may by bylaw,
resolution or agreement make further provision for indemnification of Directors,
officers, employees and agents to the fullest extent permitted by the MGCL.
Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to directors, officers and controlling persons of Registrant pursuant
to the foregoing provisions, or otherwise, Registrant has been advised that, in
the opinion of the SEC, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, 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 the 1933 Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Greenwich Street Advisors, through its predecessors, has been in the
investment counseling business since 1934 and is a division of Mutual Management
Corp. ("MMC"). MMC was incorporated in 1978 and is a wholly owned subsidiary of
Smith Barney Shearson Holdings Inc. ("Holdings"), which is in turn a wholly
owned subsidiary of The Travelers Inc. ("Travelers") (formerly known as
Primerica Corporation).
The list required by this Item 30 of officers and directors of MMC and
Greenwich Street Advisors, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two fiscal years, is incorporated by
reference to Schedules A and D of FORM ADV filed by MMC on behalf of Greenwich
Street Advisors pursuant to the Advisers Act (SEC File No. 801-14437).
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
Each Person maintaining physical possession of accounts, books and other
documents required to be maintained pursuant to Section 31(a) of the 1940 Act is
listed below:
(1) Greenwich Street Advisors
388 Greenwich Street
New York, New York 10013
(2) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
(3) Boston Safe Deposit and Trust Company
One Cabot Road
Medford, Massachusetts 02155
(4) The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend offering of the shares of Common Stock
covered by this Registration Statement until it amends the Prospectus contained
in this Registration Statement if (i) subsequent to the effective date of this
Registration Statement, its net asset value per share declines more than 10
percent from its net asset value per share as of the effective date of this
Registration Statement or (ii) its net asset value increases to an amount
greater than its net proceeds as stated in the Prospectus contained in this
Registration Statement.
(2) Registrant undertakes to file a post-effective amendment with certified
financial statements showing the initial capital received before it accepts
subscriptions from more than 25 persons if Registrant proposes to raise its
initial capital under Section 14(a)(3) of the 1940 Act.
(3) Not applicable.
(4) Not applicable.
(5) Registrant undertakes that:
(a) For purposes of determining any liability under the 1933 Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A under the 1933 Act
and contained in the form of Prospectus filed by Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the 1933 Act shall be deemed
to be part of this Registration Statement as of the time it was
declared effective.
II-3
<PAGE>
(b) For the purpose of determining any liability under the 1933 Act,
each post-effective amendment that contains the form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of the securities at
that time will be deemed to be the initial bona fide offering
thereof.
(6) Not applicable.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Pre-Effective
Amendment No. 2 to its Registration Statement on Form N-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 18th day of May, 1994.
GREENWICH STREET MUNICIPAL FUND INC.
By: /s/ HEATH B. MCLENDON
------------------------------------
Heath B. McLendon
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated:
<TABLE>
<C> <S> <C>
/s/ HEATH B. MCLENDON
------------------------------ Chairman of the Board and Chief May 18, 1994
Heath B. McLendon Executive Officer
/s/ CHARLES F. BARBER
------------------------------ Director May 18, 1994
Charles F. Barber
/s/ ALLAN J. BLOOSTEIN
------------------------------ Director May 18, 1994
Allan J. Bloostein
/s/ MARTIN BRODY
------------------------------ Director May 18, 1994
Martin Brody
/s/ DWIGHT B. CRANE
------------------------------ Director May 18, 1994
Dwight B. Crane
/s/ VINCENT NAVE
------------------------------ Treasurer (Chief Financial and May 18, 1994
Vincent Nave Accounting Officer)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- -------------------------------------------------- ------------
<S> <C> <C> <C> <C>
(a) (1) -- Articles of Incorporation of Registrant.*
(2) -- Articles of Amendment.**
(b) -- By-Laws of Registrant.*
(c) -- Not applicable.
(d) -- Form of Specimen certificate representing shares
of Common Stock, par value $.001 per share.***
(e) -- Registrant's Dividend Reinvestment Plan.
(f) -- Not applicable.
(g) (1) -- Form of Investment Advisory Agreement.
(2) -- Form of Administration Agreement.***
(h) (1) -- Form of Purchase Agreement.
(2) -- Form of Underwriting Agreement.
(i) -- Not applicable.
(j) (1) -- Form of Custody Agreement.
(2) -- Form of Transfer Agency and Registrar Agreement.
(k) -- Not applicable.
(l) -- Opinion and consent of Willkie Farr &
(1) Gallagher.***
-- Opinion and consent of Venable, Baetjer and
(2) Howard.***
(m) -- Not applicable.
(n) -- Opinion and consent of Coopers & Lybrand.***
(o) -- Not applicable.
(p) -- Not applicable.
(q) -- Not applicable.
<FN>
- ------------------------
* Incorporated by reference to Registrant's initial Registration Statement
filed with the Commission on February 19, 1993.
** Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement, filed with the Commission on April 19, 1994.
***To be filed by amendment.
</TABLE>
<PAGE>1
Exhibit (e)
GREENWICH STREET MUNICIPAL FUND INC.
TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN
1. Each holder of shares (a "Shareholder") of common stock in Greenwich
Street Municipal Fund Inc. (the "Fund") whose Fund shares are registered in
his or her own name will automatically be a participant ("Participant") in the
Dividend Reinvestment Plan (the "Plan"), unless any such Shareholder
specifically elects to receive all dividends and capital gains in cash paid by
check mailed directly to the Shareholder. A Shareholder whose shares are
registered in the name of a broker-dealer or other nominee (the "Nominee")
will be a Participant if (a) such a service is provided by the Nominee and (b)
the Nominee makes an election on behalf of the Shareholder to participate in
the Plan. Smith Barney Shearson Inc. intends to make such an election on
behalf of Shareholders whose shares are registered in its name, as Nominee,
unless a Shareholder specifically instructs his or her broker to pay dividends
and capital gains in cash. The Shareholder Services Group, Inc. (the "Agent")
will act as agent for Participants and will open an account under the Plan for
each Participant in the same name as such Participant's common stock is
registered on the books and records of the transfer agent for the common
stock.
2. Whenever the Fund declares a capital gains distribution or an income
dividend payable in shares of common stock or cash, Participants will receive
such distribution or dividend in the manner described in paragraph 3 below as
determined on the date such distribution or dividend becomes payable.
3. Whenever the market price of the Fund's common stock is equal to or
exceeds the net asset value per share at the time shares of common stock are
valued for the purpose of determining the number of shares equivalent to the
cash dividend or capital gains distribution, Participants will be issued
shares of common stock valued at the greater of (i) the net asset value per
share most recently determined or (ii) 95% of the then current market price.
Participants will receive any such distribution or dividend entirely in shares
of common stock, and the Agent shall automatically receive such shares of
common stock, including fractions, for all Participants' accounts. If the net
asset value per share of the common stock at the time of valuation exceeds the
market price of the common stock, or if the Fund should declare a dividend or
capital gains distribution payable only in cash, a broker-dealer not
affiliated with Smith Barney Shearson will, as purchasing agent (the
"Purchasing Agent") for the Participants, buy shares of common stock in the
open market, on the New York Stock Exchange (the "Exchange") or elsewhere, for
each Participant's account. If, following the commencement of
<PAGE>2
such purchases and before the Agent has completed its purchases, the market
price exceeds the net asset value per share, the average per share purchase
price paid by the Agent may exceed the net asset value of the common stock,
resulting in the acquisition of fewer shares of common stock than if the
dividend or capital gains distribution had been paid in common stock issued by
the Fund at net asset value per share.
Additionally, if the market price exceeds the net asset value of shares
before the Agent has completed its purchases, the Agent is permitted to cease
purchasing shares and the Fund may issue the remaining shares at a price equal
to the greater of (a) net asset value or (b) 95% of the then current market
price. In a case where the Agent has terminated open market purchases and the
Fund has issued the remaining shares, the number of shares received by the
participant in respect of the cash dividend or distribution will be based on
the weighted average of prices paid for shares purchased in the open market
and the price at which the Fund issues remaining shares.
The Agent will apply all cash received as a dividend or capital gains
distribution to purchase shares of common stock on the open market as soon as
practicable after the payment date of such dividend or capital gains
distribution, but in no event later than 30 days after such date, except where
necessary to comply with applicable provisions of the Federal securities laws.
4. For all purposes of the Plan: (a) the market price of the Fund's
common stock on a particular date shall be the last sale price on the Exchange
at the close of the previous trading day or, if there is no sale on the
Exchange on that date, then the mean between the closing bid and asked
quotations for such common stock on the Exchange on such date and (b) net
asset value per share of common stock on a particular date shall be as
determined by or on behalf of the Fund.
5. The open market purchases provided for above may be made on any
securities exchange where the shares of common stock of the Fund are traded,
in the over-the-counter market or in negotiated transactions, and may be on
such terms as to price, delivery and otherwise as the Purchasing Agent shall
determine. Funds held by the Purchasing Agent uninvested will not bear
interest, and it is understood that, in any event, the Purchasing Agent shall
have no liability in connection with any inability to purchase shares of
common stock within 30 days after the initial date of such purchase as herein
provided, or with the timing of any purchases effected. The Purchasing Agent
shall have no responsibility as to the value of the shares of common stock of
the Fund acquired for any Participant's account.
<PAGE>3
6. The Agent will hold shares of common stock acquired pursuant to the
Plan in noncertificated form in the Participant's name. The Agent will
forward to each Participant any proxy solicitation material and will vote any
shares of common stock so held for each Participant only in accordance with
the proxy returned by any such Participant to the Fund. Upon any
Participant's written request, the Agent will deliver to her or him, without
charge, a certificate or certificates for the full shares of common stock.
7. The Agent will confirm to each Participant acquisitions made for her
or his account as soon as practicable but not later than 60 days after the
date thereof. Although a Participant may from time to time have an undivided
fractional interest (computed to three decimal places) in a share of common
stock of the Fund, no certificates for fractional shares will be issued.
However, dividends and distributions on fractional shares of common stock will
be credited to Participants' accounts. In the event of termination of a
Participant account under the Plan, the Agent will adjust for any such
undivided fractional interest in cash at the market value of the shares of
common stock at the time of termination.
8. Any stock dividends or split shares distributed by the Fund on shares
of common stock held by the Agent for any Participant will be credited to such
Participant's account. In the event that the Fund makes available to
Participants rights to purchase additional shares of common stock or other
securities, the Agent will sell such rights and apply the proceeds of the sale
to the purchase of additional shares of common stock of the Fund for the
account of Participants.
9. The Agent's service fee for handling capital gains distributions or
income dividends will be paid by the Fund. Participants will be charged a pro
rata share of brokerage commissions on all open market purchases.
10. Any Participant may withdraw shares from such Participant's account
or terminate such Participant's account under the Plan by notifying the Agent
in writing. Such withdrawal or termination will be effective immediately if
notice is received by the Agent not less than 10 days prior to any dividend or
distribution record date; otherwise such withdrawal or termination will be
effective, with respect to any subsequent dividend or distribution, on the
first trading day after the dividends paid for such record date have been
credited to the Participant's account. The Plan may be terminated by the
Agent or the Fund upon notice in writing mailed to each Participant at least
30 days prior to any record date for the payment of any dividend or
distribution by the Fund. Upon any withdrawal or
<PAGE>4
termination, the Agent will cause to be delivered to each Participant a
certificate or certificates for the appropriate number of full shares and a
cash adjustment for any fractional share (valued at the market value of the
shares at the time of withdrawal or termination); provided, however, that any
Participant may elect by notice to the Agent in writing in advance of such
termination to have the Agent sell part or all of the shares in question and
remit the proceeds to such Participant, net of any brokerage commissions. A
$5.00 fee will be charged by the Agent upon any cash withdrawal or
termination, and the Agent is authorized to sell a sufficient number of the
Participant's shares to cover such fee and any brokerage commission on such
sale.
11. These terms and conditions may be amended or supplemented by the
Agent or the Fund at any time or times but, except when necessary or
appropriate to comply with applicable law or the rules or policies of the
Securities and Exchange Commission or any other regulatory authority, only by
mailing to each Participant appropriate written notice at least 90 days prior
to the effective date thereof. The amendment or supplement shall be deemed to
be accepted by each Participant unless, with respect to any such Participant,
prior to the effective date thereof, the Agent receives written notice of the
termination of that Participant's account under the Plan. Any such amendment
may include an appointment by the Agent in its place and stead of a successor
Agent under these terms and conditions, with full power and authority to
perform all or any of the acts to be performed by the Agent under these terms
and conditions. Upon any such appointment of an Agent for the purpose of
receiving dividends and distributions, the Fund will be authorized to pay to
such successor Agent, for Participants' accounts, all dividends and
distributions payable on the shares of common stock held in each Participant's
name or under the Plan for retention or application by such successor Agent as
provided in these terms and conditions.
12. The Agent shall at all times act in good faith and agree to use its
best efforts within reasonable limits to ensure the accuracy of all services
performed under this agreement and to comply with applicable law, but assumes
no responsibility and shall not be liable for loss or damage due to errors
unless such error is caused by its or its employees' negligence, bad faith or
willful misconduct.
13. The Participant shall have no right to draw checks or drafts against
such Participant's Account or to give instructions to the Plan Agent in
respect of any shares or cash held therein except as expressly provided
herein.
<PAGE>5
14. The Participant agrees to notify the Plan Agent promptly in writing
of any change of address. Notices to the Participant may be given by the Plan
Agent by letter addressed to the Participant as shown on the records of the
Plan Agent.
15. This Agreement and the account established hereunder for the
Participant shall be governed by and construed in accordance with the laws of
the State of Maryland and the Rules and Regulations of the Securities and
Exchange Commission, as they may be changed or amended from time to time.
<PAGE>1
Exhibit (g)(1)
GREENWICH STREET MUNICIPAL FUND INC.
INVESTMENT ADVISORY AGREEMENT
April , 1994
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
Gentlemen:
Greenwich Street Municipal Fund Inc. (the "Fund"), a corporation
formed under the laws of the State of Maryland, confirms its agreement with
Greenwich Street Advisors, a division of Mutual Management Corp., regarding
investment advisory services to be provided by Greenwich Street Advisors to
the Fund. Greenwich Street Advisors agrees to provide services upon the
following terms and conditions:
1. Investment Description; Appointment.
The Fund anticipates that it will employ its capital by investing
and reinvesting in investments of the kind and in accordance with the
limitations specified in the Fund's Articles of Incorporation dated as of
February 19, 1993 (the "Articles"), as amended from time to time, in the
prospectus (the "Prospectus") describing the Fund filed with the Securities
and Exchange Commission as part of the Fund's Registration Statement on Form
N-2, as amended from time to time, and in the manner and to the extent as may
from time to time be approved by the Board of Directors of the Fund. Copies
of the Prospectus and the Articles have been or will be submitted to Greenwich
Street Advisors. The Fund desires to employ and appoints Greenwich Street
Advisors to act as its investment adviser. Greenwich Street Advisors accepts
the appointment and agrees to furnish the services for the compensation set
forth below.
2. Services as Investment Adviser.
Subject to the supervision and direction of the Board of Directors
of the Fund, Greenwich Street Advisors will (a) manage the Fund's holdings in
accordance with the Fund's investment objective and policies as stated in the
Prospectus; (b) make investment decisions for the Fund; (c) place orders to
purchase and sell securities on behalf of the Fund; and (d) employ
professional investment managers and securities analysts
<PAGE>2
who provide research services to the Fund. In providing those services,
Greenwich Street Advisors will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's assets.
3. Brokerage.
In selecting brokers or dealers to execute securities transactions
on behalf of the Fund, Greenwich Street Advisors will seek the best overall
terms available. In assessing the best overall terms available for any
transaction, Greenwich Street Advisors will consider the factors it deems
relevant, including, but not limited to, the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission,
if any, for the specific transaction and on a continuing basis. In selecting
brokers or dealers to execute a particular transaction, and in evaluating the
best overall terms available, Greenwich Street Advisors is authorized,
consistent with the provisions of Section 28(e) of the Securities Exchange Act
of 1934, to consider the brokerage and research services (as those terms are
defined in Section 28(e)) provided to the Fund and/or other accounts over
which Greenwich Street Advisors or its affiliates exercise investment
discretion.
4. Information Provided to the Fund.
Greenwich Street Advisors will keep the Fund informed of
developments materially affecting the Fund, and will, on its own initiative,
furnish the Fund from time to time with whatever information Greenwich Street
Advisors believes is appropriate for this purpose.
5. Standard of Care.
Greenwich Street Advisors will exercise its best judgment in
rendering the services described in paragraph 2 of this Agreement. Greenwich
Street Advisors will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except that nothing in this Agreement may be deemed to
protect or purport to protect Greenwich Street Advisors against any liability
to the Fund or to its shareholders to which Greenwich Street Advisors would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of
Greenwich Street Advisors' reckless disregard of its obligations and duties
under this Agreement.
<PAGE>3
6. Compensation.
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay Greenwich Street Advisors on the first business
day of each month a fee for the previous month at the annual rate of .90 of
1.00% of the value of the Fund's average weekly net assets. The fee for the
period from the date the Fund commences its investment operations to the end
of the month during which the Fund commences its investment operations will be
prorated according to the proportion that the period bears to the full monthly
period. Upon any termination of this Agreement before the end of a month, the
fee for such part of that month will be prorated according to the proportion
that the period bears to the full monthly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to Greenwich Street Advisors, the value of the Fund's net assets will
be computed at the times and in the manner specified in the Prospectus.
7. Expenses.
Greenwich Street Advisors will bear all expenses in connection with
the performance of its services under this Agreement. The Fund will bear all
other expenses to be incurred in its operation, including, but not limited to:
the costs incurred in connection with the Fund's organization; investment
advisory and administration fees; fees for necessary professional and
brokerage services; fees for any pricing service; the costs of regulatory
compliance; the costs associated with maintaining the Fund's corporate
existence; and costs of corresponding with the Fund's shareholders.
8. Services to Other Companies or Accounts.
(a) The Fund understands that Greenwich Street Advisors now acts,
will continue to act and may act in the future as investment adviser to
fiduciary and other managed accounts, and may act in the future as investment
adviser to other investment companies, and the Fund has no objection to
Greenwich Street Advisors so acting, provided that whenever the Fund and one
or more fiduciary and other managed accounts or other investment companies
advised by Greenwich Street Advisors have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed by Greenwich Street Advisors to be equitable to each.
The Fund recognizes that in some cases this procedure may adversely affect the
price paid or received by the Fund or the size of the position obtained or
disposed of by the Fund.
<PAGE>4
(b) The Fund understands that the persons employed by Greenwich
Street Advisors to assist in the performance of Greenwich Street Advisors'
duties under this Agreement will not devote their full time to such service
and nothing contained in this Agreement will be deemed to limit or restrict
the right of Greenwich Street Advisors or any affiliate of Greenwich Street
Advisors to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Term of Agreement.
(a) This Agreement will become effective as of the date the Fund
commences its investment operations and will continue for an initial two-year
term and will continue thereafter so long as the continuance is specifically
approved at least annually by (i) the Fund's Board of Directors or (ii) a vote
of a "majority" (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")), of the Fund's outstanding voting securities, provided that
in either event the continuance is also approved by a majority of the Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on the approval.
(b) This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors or by vote of holders of a majority
of the Fund's shares, or upon 90 days' written notice, by Greenwich Street
Advisors.
(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
* * * * *
<PAGE>5
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
GREENWICH STREET MUNICIPAL FUND INC.
By:
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
GREENWICH STREET ADVISORS
By:
Name:
Title:
<PAGE>1
Exhibit (h)(1)
GREENWICH STREET MUNICIPAL FUND INC.
PURCHASE AGREEMENT
Greenwich Street Municipal Fund Inc. (the "Fund"), a corporation
formed under the laws of the State of Maryland, and Smith Barney Shearson Inc.
("Smith Barney Shearson"), a corporation organized under the laws of the State
of Delaware, agree as follows:
1. Offer and Purchase. The Fund offers Smith Barney Shearson, and
Smith Barney Shearson purchases, [8,866] shares of the Fund's Common Stock,
par value $.001 per share (the "Shares"). Smith Barney Shearson acknowledges
receipt of a certificate representing the Shares and the Fund acknowledges
receipt from Smith Barney Shearson of $[100,008.48] in full payment for the
Shares.
2. Representation by Smith Barney Shearson. Smith Barney Shearson
represents and warrants to the Fund that the Shares are being acquired for
investment purposes and not with a view to resale or further distribution.
3. No Right of Assignment. Smith Barney Shearson's right under
this Purchase Agreement to purchase the Shares is not assignable.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day of , 1994.
GREENWICH STREET MUNICIPAL FUND INC.
By:
Name: Richard P. Roelofs
Title: President
SMITH BARNEY SHEARSON INC.
By:
Name: Heath B. McLendon
Title: Senior Executive
Vice President
<PAGE>1
Exhibit (h)(2)
5,000,000 Shares
GREENWICH STREET MUNICIPAL FUND, INC.
Common Stock
UNDERWRITING AGREEMENT
, 1994
SMITH BARNEY SHEARSON INC.
As Representative of the several
Underwriters named in Schedule 1
c/o SMITH BARNEY SHEARSON INC.
American Express Tower
World Financial Center
200 Vesey Street
New York, New York 10285
Dear Sirs:
Greenwich Street Municipal Fund Inc., a Maryland corporation (the
"Company"), proposes to issue and sell 5,000,000 shares of its Common Stock,
par value $.001 per share (the "Firm Stock"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an
additional 750,000 shares of its Common Stock on the terms and for the
purposes set forth in Paragraph 2 (the "Option Stock"). The Firm Stock and
the Option Stock, if purchased, are hereinafter called the "Stock". This is
to confirm the agreement concerning the purchase of the Stock from the Company
by the Underwriters named in Schedule 1 hereto (the "Underwriters").
1. Representations and Warranties. (a) The Company represents,
warrants and agrees that:
(i) A registration statement on Form N-2 with respect to the
Stock (A) has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, the Investment Company Act of 1940, as
amended (the "Investment Company Act", and together with the
Securities Act, the "Acts"), and the rules and regulations of the
Commission thereunder, (B) has been filed with the Commission under
the Acts and (C) has become effective under the Acts. If any
<PAGE>2
post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the most
recent such amendment has been declared effective by the Commission. Copies
of such registration statement as amended to date have been delivered by the
Company to you as the representative (the "Representative") of the
Underwriters. A notification of registration on Form N-8A (the
"Notification") has been filed by the Company with the Commission under the
Investment Company Act. As used in this Agreement, "Effective Time" means the
date and time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the "Effective Time";
"Preliminary Prospectus" means each prospectus included in that registration
statement, or amendments thereto, before it became effective under the Acts
and any prospectus filed by the Company with the consent of the Representative
pursuant to Rule 497(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
all information deemed to be a part thereof as of the Effective Time pursuant
to paragraph (b) of Rule 430A of the Rules and Regulations; and "Prospectus"
means the prospectus as first filed pursuant to Rule 497 of the Rules and
Regulations ("Rule 497"). The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus and the
Company has not received any notice from the Commission pursuant to Section
8(e) of the Investment Company Act with respect to the Notification or the
Registration Statement.
(ii) The Registration Statement contains, and any post-
effective amendment to the Registration Statement filed with the
Commission after the Effective Time, the Prospectus and the
Prospectus as amended or supplemented will contain, all statements
which are required by the Acts and the rules and regulations
thereunder; on the Effective Date, the Registration Statement did
not, and any post-effective amendment to the Registration Statement
filed with the Commission after the Effective Time, the Prospectus
and the Prospectus as amended and supplemented will not, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not
<PAGE>3
misleading; and the Notification complied in all material respects with the
requirements of the Investment Company Act and the rules and regulations of
the Commission thereunder and does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Company makes no representations, warranties or agreements as to the
information contained in or omitted from the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of any Underwriter through the Representative specifically for inclusion
therein.
(iii) The Company is not in violation of its corporate charter
or by-laws or in default under any agreement, indenture or
instrument, the effect of which violation or default would be
material to the Company.
(iv) This Agreement, the Investment Advisory Agreement (the
"Advisory Agreement") between the Company and Greenwich Street
Advisors, a division of Mutual Management Corp. (the "Advisor"), the
Administration Agreement (the "Administration Agreement") between
the Company and The Boston Company Advisors, Inc. ("Boston
Advisors"), the Custodian Agreement (the "Custodian Agreement")
between the Company and Boston Safe Deposit and Trust Company and
the Transfer Agency and Registrar Agreement (the "Transfer Agency
and Registrar Agreement") between the Company and The Shareholder
Services Group, Inc., have each been duly authorized, executed and
delivered by the Company; and this Agreement, the Advisory
Agreement, the Administration Agreement, the Custodian Agreement and
the Transfer Agency and Registrar Agreement each constitutes the
valid and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
and by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Advisory Agreement, the
<PAGE>4
Administration Agreement, the Custodian Agreement or the Transfer Agency and
Registrar Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby or thereby, except such as have been obtained
and such as may be required under the Acts, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters. The execution, delivery and performance of this Agreement, the
Advisory Agreement, the Administration Agreement, the Custodian Agreement and
the Transfer Agency and Registrar Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby will not conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon the assets of the Company pursuant to the
terms of, result in a breach or violation by the Company of any of the terms
or provisions of, or constitute a default by the Company under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company is a party or to which it or its property is
subject, the corporate charter or by-laws of the Company, any statute, or any
judgment, decree, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its property.
(v) Since the dates as to which information is given in the
Registration Statement and the Prospectus, except as described in or
contemplated therein, (A) there has not been any material adverse
change in, or any material adverse development which affects the
business, properties, financial condition, results of operations or
prospects of the Company and (B) there have been no transactions
entered into by the Company which are material to the Company other
than those in the ordinary course of business.
(vi) Coopers & Lybrand, whose report appears in the Prospectus,
are independent public accountants as required by the Acts and the
rules and regulations thereunder.
(vii) All the authorized shares of Common Stock, including the
Stock, have been duly authorized, and all the issued and outstanding
shares of the Common Stock are, and all the shares of the Stock
being sold by the
<PAGE>5
Company, when issued, delivered and paid for on the First Delivery Date and
each Subsequent Delivery Date (each as hereinafter defined), if any, will be,
validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof. None of the shares of the Stock
when delivered will be subject to any lien, claim, encumbrance, preemptive
rights or any other claim of any third party and the Stock will conform to the
description thereof contained in the Registration Statement and the
Prospectus.
(viii) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Maryland, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or
hold its properties and to conduct its business as described in the
Prospectus and to issue and sell the Stock as contemplated by this
Agreement.
(ix) Except as described in the Registration Statement and the
Prospectus, there is no litigation or proceeding pending or, to the
knowledge of the Company, threatened against the Company which might
result in any adverse change in the financial condition, results of
operations, business or prospects of the Company or which is
required to be disclosed in the Registration Statement and the
Prospectus.
(x) The Statement of Assets and Liabilities filed as part of
the Registration Statement or included in any Preliminary Prospectus
or the Prospectus presents fairly the financial condition of the
Company, at the date indicated, and has been prepared in conformity
with generally accepted accounting principles applied on a
consistent basis.
(xi) The advertising and sales literature used by the Company
in connection with the public offering and sale of the Stock
(including any advertising or sales literature used pursuant to Rule
482 under the Rules and Regulations and filed by the Underwriters
with the National Association of Securities Dealers, Inc. (the
"NASD") for review in accordance with Rule 497(i) under the Rules
and Regulations (an "Omitting Prospectus"))
<PAGE>6
complies with the Acts and the rules and regulations thereunder and does 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.
(xii) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to
the Registration Statement by the Acts or by the rules and
regulations thereunder which have not been described in the
Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the rules and
regulations thereunder.
(xiii) The Company is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified management
investment company. 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 provisions of
the Acts. No person is serving or acting as an officer, director or
investment adviser of the Company except in accordance with the
provisions of the Investment Company Act and the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), and the rules and
regulations of the Commission under such acts.
(xiv) The Stock is duly authorized for listing, subject to
official notice of issuance, on the New York Stock Exchange, Inc.
b. The Adviser makes the same representations and warranties as
the Company set forth under Paragraph 1(a)(i), (ii) and (xi) above, and
further represents to, warrants to and agrees with each of the several
Underwriters that:
(i) The Adviser has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Delaware, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership of property or the conduct of its business requires such
qualification (except where the failure to so qualify would not have
a material adverse effect on the Adviser), and has all power and
authority necessary to own or hold its properties and to conduct its
business as described in the Prospectus.
<PAGE>7
(ii) The Adviser is duly registered and in good standing with
the Commission under the Advisers Act as an investment adviser, and
there does not exist any proceeding or any facts or circumstances,
except as described in the Prospectus, the existence of which could
lead to any proceeding which could adversely affect the registration
or good standing of the Adviser with the Commission. The Adviser is
not prohibited by the Advisers Act or the Investment Company Act, or
the rules and regulations under such acts, from acting for the
Company under the Advisory Agreement as contemplated by the
Prospectus.
(iii) The description of the Adviser in the Prospectus is true
and correct and does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iv) This Agreement and the Advisory Agreement have each been
duly authorized, executed and delivered by the Adviser, and each
constitutes the valid and binding obligation of the Adviser
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights and by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). No consent, approval,
authorization or order of any court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement or the Advisory Agreement by the Adviser or the
consummation by the Adviser of the transactions contemplated hereby
or thereby, except such as have been obtained and such as may be
required under the Acts, the Exchange Act, the Advisers Act or
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters. The execution,
delivery and performance of this Agreement and the Advisory
Agreement by the Adviser and the consummation by the Adviser of the
transactions contemplated hereby and thereby will not conflict with,
result in the creation or imposition of any lien, charge or
encumbrance upon the assets of the Adviser pursuant to the terms of,
result in a breach or violation by the Adviser of any of the terms
or provisions of, or constitute a default by the Adviser
<PAGE>8
under, any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Adviser is a party or to which it or its
property is subject, the corporate charter or by-laws of the Adviser, any
statute, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Adviser or any of its
property.
(v) Except as described in the Registration Statement and the
Prospectus, there is no litigation or proceeding pending or, to the
knowledge of the Adviser, threatened against the Adviser which might
result in any material adverse change in the financial condition,
results of operations, business or prospects of the Adviser or which
is required to be disclosed in the Registration Statement and the
Prospectus.
(vi) The Adviser has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Prospectus.
(vii) The Adviser is not in violation of its corporate charter
or by-laws or in default under any material agreement, indenture or
instrument.
2. Purchase of the Shares by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to each of the
Underwriters, severally and not jointly, and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. In addition,
the Company grants to the Underwriters, solely for the purpose of covering
over-allotments in the sale of shares of Firm Stock, an option to purchase all
or any portion of the Option Stock exercisable as provided in Paragraph 4
hereof. Shares of Option Stock shall be purchased severally for the account
of the Underwriters in proportion to the number of shares of Firm Stock set
opposite the name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the Option Stock
shall be adjusted by the Representative so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share amounts. The price
of both the Firm Stock and the Option Stock shall be $ per share.
<PAGE>9
3. Substitution of Underwriters. The Company shall not be
obligated to deliver any of the Stock except upon payment for all the Stock to
be purchased hereunder or as hereinafter provided.
If, on the First Delivery Date (as hereinafter defined) or any
Subsequent Delivery Date (as hereinafter defined), as the case may be, any
Underwriter defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Underwriters shall be obligated to
purchase the Stock which the defaulting Underwriter agreed but failed to
purchase in the respective proportions which the number of shares of the Firm
Stock set opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 hereto; provided that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Stock if the total number of
shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of
shares of the Stock to be purchased on such date pursuant to the terms of
Paragraph 2, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of Stock which it
agreed to purchase on such date pursuant to the terms of Paragraph 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representative who so agree,
shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the Stock. If the remaining
Underwriters or other underwriters satisfactory to the Representative do not
elect to purchase the shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
that the Company and the Adviser will continue to be liable for the payment of
expenses as set forth in Paragraphs 5(j) and 9.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default.
If other underwriters agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representative or the Company may postpone
the First Delivery Date or any Subsequent Delivery Date, as the case may be,
for up to seven full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
<PAGE>10
4. Delivery and Payment for Shares. Delivery of and payment for
the Firm Stock shall be made at the office of Smith Barney Shearson Inc., 388
Greenwich Street (Cashier's Window, Main Level), New York, New York 10013, at
10:00 A.M., New York City time, on the fifth business day following the date
of this Agreement or at such later date as shall be determined by agreement
between the Representative and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company shall deliver the certificates representing the Firm Stock to the
Representative for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by certified or official bank
check or checks payable in New York Clearing House (next-day) funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names
and in such denominations as the Representative shall request in writing not
less than two full business days prior to the First Delivery Date. For the
purpose of expediting the checking and packaging of the Firm Stock, the
Company shall make the certificates representing the Firm Stock available for
inspection by the Representative in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery
Date.
At any time on or before the forty-fifth day following the first
date on which the Firm Stock is offered to the public, the option granted in
Paragraph 2 may be exercised in one or more installments by written notice
being given to the Company by the Representative. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being
exercised and the date and time, as determined by the Representative, when the
shares of Option Stock are to be delivered (each such date, a "Subsequent
Delivery Date"); provided, however, that each Subsequent Delivery Date shall
not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the fifth business day after the date on which the option shall
have been exercised.
Delivery of and payment for the Option Stock shall be made at the
offices of Smith Barney Shearson Inc., 388 Greenwich Street (Cashier's Window,
Main Level), New York, New York 10013, at 10:00 A.M., New York City time, on
each Subsequent Delivery Date. On each Subsequent Delivery Date, the Company
shall deliver the certificates representing the Option Stock to the
Representative for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price
<PAGE>11
by certified or official bank check or checks payable in New York Clearing
House (next-day) funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representative shall request in writing not less than two full business days
prior to each Subsequent Delivery Date. For the purpose of expediting the
checking and packaging of the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representative in New York, New York, not later than 2:00 P.M. on the business
day prior to each Subsequent Delivery Date.
5. Covenants. The Company agrees:
(a) To furnish promptly to the Representative and to counsel for
the Underwriters a signed copy of the Notification and the Registration
Statement as originally filed, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(b) To deliver promptly to the Representative such number of
conformed copies of the Notification and the Registration Statement as
originally filed and each amendment thereto (excluding exhibits other
than this Agreement) and of each Preliminary Prospectus, the Prospectus
and any amended or supplemented Prospectus as the Representative may
reasonably request;
(c) To file promptly with the Commission the Prospectus pursuant to
Rule 497 and any amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus that may, in the judgment
of the Company or the Representative be required by the Acts or requested
by the Commission and approved by the Representative;
(d) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, or to filing any
Prospectus pursuant to Rule 497 of the Rules and Regulations, to furnish
a copy thereof to the Representative and counsel for the Underwriters and
obtain the consent of the Representative to the filing;
(e) To advise the Representative promptly (i) when any post-
effective amendment to the Registration Statement becomes effective, (ii)
of any request or proposed request by the Commission for an amendment to
the Registration Statement, a supplement to the Prospectus or for any
<PAGE>12
additional information, (iii) of the issuance by the Commission of any stop-
order suspending the effectiveness of the Registration Statement or the
initiation or threat of any stop-order proceeding, (iv) of receipt by the
Company of a notice from or order of the Commission pursuant to Section 8(e)
of the Investment Company Act, (v) of receipt by the Company of any
notification with respect to the suspension of the qualification of the Stock
for sale in any jurisdiction or the initiation or threat of any proceeding for
that purpose or any action by the New York Stock Exchange, Inc. rejecting,
suspending or terminating the application for the listing of, or the listing
of, the Stock, and (vi) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement, the
Prospectus or any Omitting Prospectus, or which requires the making of a
change in the Registration Statement, the Prospectus or any Omitting
Prospectus in order to make any material statement therein not misleading;
(f) If the Commission shall issue a stop-order suspending the
effectiveness of the Registration Statement or an order pursuant to
Section 8(e) of the Investment Company Act, to make every reasonable
effort to obtain the lifting of any such order at the earliest possible
time;
(g) As soon as practicable after the Effective Date, to make
generally available to its security holders and to deliver to the
Representative an earnings statement, conforming with the requirements of
Section 11(a) of the Securities Act, covering a period of at least twelve
months beginning after the Effective Date;
(h) For a period of five years from the Effective Date, to furnish
to the Representative copies of all public reports and all reports and
financial statements furnished by the Company to the New York Stock
Exchange, Inc. pursuant to requirements of or agreements with such
exchange or to the Commission pursuant to the Exchange Act, the
Investment Company Act or any rule or regulation of the Commission
thereunder;
(i) To endeavor to qualify the Stock for offer and sale under the
securities laws of such jurisdictions as the Representative may
reasonably request for as long as necessary for the distribution of the
Stock; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a
general consent for service of process;
<PAGE>13
(j) To pay the costs incident to the authorization, issuance, sale
and delivery of the Stock to be sold by the Company to the Underwriters
and any taxes payable in that connection; the costs incident to the
preparation, printing and filing under the Acts of the Registration
Statement and the Notification and any amendments and exhibits thereto;
the costs of preparing, printing and distributing the Registration
Statement as originally filed and each amendment thereto and any post-
effective amendments thereof (including exhibits), any Preliminary
Prospectus, any Omitting Prospectus or other advertising or sales
literature used in connection with the public offering of the Stock, the
Prospectus and any amendment or supplement to the Prospectus as provided
in this Agreement; the costs of printing any agreement with selected
dealers; the costs of printing this Agreement and the Agreement Among
Underwriters; the costs of filings with the NASD; the costs of listing
the Stock on the New York Stock Exchange, Inc.; the fees and expenses of
qualifying the Stock under the securities laws of the several
jurisdictions as provided in this Paragraph and of preparing and printing
a Blue Sky Memorandum (including related fees and expenses of counsel to
the Underwriters); and all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement;
provided that, except as provided in this Paragraph and in Paragraph 9,
the Underwriters shall pay their own costs and expenses, including the
fees and expenses of their counsel and any transfer taxes on the Stock
which they may sell; and provided, further, that if the fees and expenses
payable by the Company or to be reimbursed by the Company to the
Underwriters pursuant to any provision of this Paragraph 5(j) are not so
paid or reimbursed, the Adviser agrees to pay or reimburse the
Underwriters for such fees and expenses;
(k) To apply the net proceeds from the sale of the Stock for the
purposes set forth in the Prospectus;
(l) Except for the shares of Stock and any shares of Common Stock
of the Company issued to shareholders pursuant to the Company's Dividend
Reinvestment Plan, not to offer, sell or register any shares with the
Commission or announce an offering of any securities of the Company
within 180 days after the date hereof;
(m) The Company will not establish a record date for the payment of
dividends or other distributions which is earlier than seven full
business days after the last day on
<PAGE>14
which the several Underwriters exercise their option to purchase the Option
Shares pursuant to Paragraph 2.
6. Indemnification and Contribution. (a) The Company and the
Adviser, jointly and severally shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Stock), to which that Underwriter or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Notification, any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Omitting Prospectus or the Registration
Statement or the Prospectus as amended or supplemented, or (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Underwriter and each such controlling person promptly upon
demand for any legal and other expenses reasonably incurred by that
Underwriter or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action, as such expenses are incurred; provided that the Company
and the Adviser shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, any Omitting Prospectus or in the
Registration Statement or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Company through the Representative by or on behalf of any Underwriter
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Company or the Adviser may otherwise have
to any Underwriter or any controlling person of that Underwriter.
(b) Each Underwriter severally and not jointly shall indemnify and
hold harmless the Company, the Adviser, each of their respective directors,
each of their respective officers who signed the Registration Statement and
any person who controls the Company or the Adviser within the meaning of the
Securities Act from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, the Adviser
or any such director, officer or controlling person may become subject, under
the Securities Act or otherwise,
<PAGE>15
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, any Omitting Prospectus or the Registration Statement or the
Prospectus as amended or supplemented, or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or the Adviser through the
Representative by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company or the Adviser for any legal and
other expenses reasonably incurred by the Company or the Adviser or any such
director, officer or controlling person in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action.
The foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company, the Adviser or any of their
respective directors, officers or controlling persons.
(c) Promptly after receipt by an indemnified party under this
Paragraph of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Paragraph, notify the indemnifying party in
writing of the claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Paragraph. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Paragraph for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Representative shall have
the right to employ counsel to represent the Representative and those other
Underwriters and their respective controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Underwriters against the Company under this Paragraph if, in the
reasonable judgment of
<PAGE>16
the Representative, it is advisable for the Representative and those
Underwriters and any such controlling persons to be represented by separate
counsel, and in that event the fees and reasonable expenses of such separate
counsel shall be paid by the Company.
(d) If the indemnification provided for in this Paragraph shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Paragraph 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Adviser on the one hand and the Underwriters
on the other from the offering of the Stock or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Adviser on the
one hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Adviser on the one hand
and the Underwriters on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Stock (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters with respect to such offering, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the 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 the Adviser on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Adviser and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Paragraph were to be 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 does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Paragraph shall be deemed
to
<PAGE>17
include, for purposes of this Paragraph, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Paragraph, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Stock underwritten by it
and distributed to the public was offered to the public exceeds that amount of
any damages which such Underwriter has otherwise paid or become liable to pay
by reason of any 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Paragraph are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm that the statements with
respect to the public offering of the Stock set forth on the cover page of,
and under the caption "Underwriting" in, the Prospectus are correct and were
furnished in writing to the Company by or on behalf of the Underwriters
severally for inclusion in the Registration Statement and the Prospectus.
(f) The indemnity agreements contained in this Paragraph and the
representations, warranties and agreements of the Company and the Adviser in
Paragraphs 1 and 5 shall survive the delivery of the Stock and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
7. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representative, in its absolute discretion, by notice
given to and received by the Company prior to delivery of and payment for the
Stock, if prior to that time (i) the Company or the Adviser shall have failed,
refused or been unable to perform any agreement on their part to be performed
hereunder, (ii) any other condition of the Underwriters' obligations hereunder
is not fulfilled, (iii) trading in securities generally on the New York Stock
Exchange, Inc., the American Stock Exchange or the over-the-counter market
shall have been suspended, or limited or minimum prices shall have been
established on either of such exchanges or such market by the Commission or
such exchange or by any other regulatory body or governmental authority having
jurisdiction, (iv) a banking moratorium shall have been declared by either
Federal or New York State authorities, (v) the United States shall have
<PAGE>18
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States, or (vi) there shall have
been such a material adverse change in general financial, political or
economic conditions, or the effect of international conditions on the
financial markets in the United States shall be such as, in the judgment of
the Representative, makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Stock.
8. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when
made and on the First Delivery Date and each Subsequent Delivery Date, of the
representations and warranties of the Company and the Adviser contained
herein, to performance by the Company and the Adviser of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Paragraph 5(c); at or before the First Delivery Date
and each Subsequent Delivery Date, as the case may be, no stop-order
suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the Investment Company Act shall have been
issued, and prior to that time no stop-order proceeding or proceeding for
an order pursuant to Section 8(e) of the Investment Company Act shall
have been initiated or threatened by the Commission; any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with;
and the Company shall not have filed with the Commission the Prospectus
or any amendment or supplement to the Registration Statement or the
Prospectus without the consent of the Representative which consent has
not been unreasonably withheld or delayed.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the First Delivery Date or any Subsequent Delivery
Date, as the case may be, that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the reasonable opinion of Simpson Thacher &
Bartlett, counsel for the Underwriters, is material or omits to state a
fact which, in the reasonable opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
<PAGE>19
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement and the Stock and
the form of the Registration Statement and the Prospectus, other than
financial statements and other financial data, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be satisfactory in all respects to Simpson Thacher &
Bartlett, counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Willkie Farr & Gallagher shall have furnished to the
Representative on the First Delivery Date and each Subsequent Delivery
Date their opinion addressed to the Underwriters and dated such Delivery
Date, as counsel to the Company and the Adviser, to the effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Maryland, is duly qualified to do business and in good
standing as a foreign corporation in all jurisdictions in which its
ownership of property or the conduct of its business requires such
qualification (except where the failure to so qualify would not have
a material adverse effect upon the Company), and has all power and
authority necessary to own its properties and conduct the business
in which it is engaged as described in the Prospectus;
(ii) The Stock is listed on the New York Stock Exchange,
Inc. and registered under the Exchange Act.
(iii) All of the authorized shares of Common Stock of the
Company, including the Stock, have been duly authorized and, upon
payment for the Stock pursuant to the terms of this Agreement, all
of the issued and outstanding shares of Common Stock of the Company,
including the Stock, will be validly issued and outstanding, fully
paid and nonassessable, with no personal liability attaching to the
ownership thereof, and the certificates evidencing the Stock comply
with all formal requirements of Maryland law;
(iv) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer
of, any shares of the Stock
<PAGE>20
pursuant to the Company's corporate charter or by-laws or any agreement or
other outstanding instrument known to such counsel;
(v) The Stock conforms in all material respects as to
legal matters to the statements concerning the Common Stock of the
Company contained in the Prospectus, and the authorized and
outstanding shares of capital stock of the Company is as set forth
in the Prospectus;
(vi) The Registration Statement is effective under the
Acts; any required filing of the Prospectus pursuant to Rule 497 has
been made within the time period required by Rule 497; no stop-order
suspending its effectiveness or order pursuant to Section 8(e) of
the Investment Company Act has been issued, and, to the knowledge of
such counsel, no proceeding for any such purpose is pending or
threatened by the Commission;
(vii) The Notification, the Registration Statement, any
Omitting Prospectus and the Prospectus (except that no opinion need
be expressed as to the financial statements or other financial and
statistical data contained therein) comply as to form in all
material respects with the requirements of the Acts and the rules
and regulations thereunder;
(viii) The statements made in the Prospectus under the
captions "Description of Capital Stock" and "Certain Provisions of
the Articles of Incorporation", insofar as they purport to summarize
the provisions of documents or agreements specifically referred to
therein, fairly present the information called for with respect
thereto by Form N-2;
(ix) Such counsel does not know of any litigation or any
proceeding pending or threatened against the Company which could
affect the subject matter of this Agreement, or is required to be
disclosed in the Prospectus which is not disclosed and correctly
summarized therein;
(x) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Acts or by the rules and regulations
thereunder which have not been filed as exhibits to the Registration
<PAGE>21
Statement or incorporated therein by reference as permitted by the rules and
regulations;
(xi) To the best of such counsel's knowledge, the Company
is not in violation of its corporate charter or by-laws, or in
default under any material agreement, indenture or instrument;
(xii) This Agreement, the Advisory Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer
Agency and Registrar Agreement have been duly authorized, executed
and delivered by the Company and each complies with all applicable
provisions of the Investment Company Act and the Advisers Act, as
applicable; the Advisory Agreement, the Administration Agreement,
the Custodian Agreement and the Transfer Agency and Registrar
Agreement each constitutes the valid and binding obligation of the
Company enforceable in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights and by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); the execution, delivery and
performance of this Agreement, the Advisory Agreement, the
Administration Agreement, the Custodian Agreement and the Transfer
Agency and Registrar Agreement by the Company will not conflict
with, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company pursuant to the
terms of, or constitute a default under, any agreement, indenture or
instrument known to such counsel, or result in a violation of the
corporate charter or by-laws of the Company or the Acts, the
Exchange Act, or the Advisers Act, any order, rule or regulation of
any court or governmental agency having jurisdiction over the
Company or its property; and no consent, authorization or order of,
or filing or registration with, any court or governmental agency is
required for the execution, delivery and performance of this
Agreement, the Advisory Agreement, the Administration Agreement, the
Custodian Agreement or the Transfer Agency and Registrar Agreement
by the Company, except such as has been obtained under the Acts or
the Exchange Act or as may be required by state securities laws;
<PAGE>22
(xiii) The Company is registered with the Commission under
the Investment Company Act as a closed-end, non-diversified
management investment company; all required action has been taken by
the Company under the Acts and the Exchange Act to make the public
offering and consummate the sale of the Stock pursuant to this
Agreement; the provisions of the corporate charter and by-laws of
the Company comply as to form in all material respects with the
requirements of the Investment Company Act; the provisions of the
corporate charter and by-laws of the Company and the investment
policies and restrictions described in the Prospectus under the
captions "Investment Objective and Management Policies" and
"Investment Restrictions" comply with the requirements of the
Investment Company Act;
(xiv) The information in the Prospectus under the caption
"Taxation", to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel and is correct
in all material respects;
(xv) The Adviser has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Delaware, is duly qualified to do business in good standing
as a foreign corporation in all jurisdictions in which its ownership
of property or the conduct of its business requires such
qualification (except where the failure to do so would not have a
material adverse effect on the Adviser) and has all power and
authority necessary to own its properties and conduct the business
in which it is engaged as described in the Prospectus;
(xvi) This Agreement and the Advisory Agreement have been
duly authorized, executed and delivered by the Adviser and each
complies with all applicable provisions of the Investment Company
Act and the Advisers Act, as applicable; the Advisory Agreement
constitutes the valid and binding obligation of the Adviser
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights and by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); the execution, delivery and
performance of this Agreement
<PAGE>23
and the Advisory Agreement by the Adviser will not conflict with, or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Adviser pursuant to the terms of, or constitute a default under,
any agreement, indenture or instrument known to such counsel, or result in a
violation of the corporate charter or by-laws of the Adviser or any statute
(including the Acts), any order, rule or regulation of any court or
governmental agency having jurisdiction over the Adviser or its property; and
no consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the execution, delivery and
performance of this Agreement or the Advisory Agreement by the Adviser, except
such as has been obtained under the Acts, the Advisers Act or the Exchange Act
or as may be required by state securities laws;
(xvii) The Adviser is duly registered with the Commission
under the Advisers Act as an investment adviser and is not
prohibited by the Advisers Act or the Investment Company Act, or the
rules and regulations under such acts, from acting under the
Advisory Agreement for the Company as contemplated by the
Prospectus;
(xviii) Such counsel does not know of any litigation or any
proceeding pending or threatened against the Adviser which could
affect the subject matter of this Agreement or the Advisory
Agreement or the registration or good standing of the Adviser with
the Commission, or is required to be disclosed in the Prospectus
which is not disclosed and correctly summarized therein;
(xix) To the best of such counsel's knowledge, the Adviser
is not in violation of its corporate charter or by-laws, or in
default under any material agreement, indenture or instrument; and
(xx) The description of the Adviser in the Registration
Statement and the Prospectus does not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
Such opinion shall also contain a statement that in the course of
the preparation by the Company of the Registration
<PAGE>24
Statement and the Prospectus, such counsel participated in conferences with
certain officers and employees of the Company and the Adviser and the
Company's independent accountants and that such counsel's investigations made
in connection with the preparation of the Registration Statement and the
Prospectus and such counsel's participation in the conferences referred to
above did not disclose to such counsel any information which caused such
counsel to believe that the Registration Statement, as of the Effective Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus on such Delivery Date
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Such opinion
shall also contain a statement that such counsel has no reason to believe that
the Notification contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. In giving such opinion, Willkie
Farr & Gallagher may rely on the opinion of Venable, Baetjer and Howard as to
matters of Maryland law, provided that Willkie Farr & Gallagher furnish a copy
thereof to the Representative and state that such opinion is satisfactory in
substance and form and that the Underwriters and counsel for the Underwriters
are entitled to rely thereon.
(e) The Company shall have furnished to the Representative on the
First Delivery Date and each Subsequent Delivery Date a certificate,
dated such Delivery Date, of its Chairman of the Board and Chief
Executive Officer, its President or a Vice President and its Treasurer or
an Assistant Treasurer stating that:
(i) The representations, warranties and agreements of the
Company in Paragraph 1 are true and correct as of such Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Paragraph 8(a) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, (A) as of the Effective
Date, the Registration Statement did not include any untrue
statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and on such Delivery Date, the
Prospectus and any Omitting Prospectus do not
<PAGE>25
include any untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date, no event
has occurred which should have been set forth in a supplement to, or amendment
of, the Prospectus which has not been set forth in such a supplement or
amendment.
(f) The Adviser shall have furnished to the Representative on the
First Delivery Date and each Subsequent Delivery Date a certificate,
dated such Delivery Date, of its Chairman of the Board, its President or
a Vice President and its Treasurer or an Assistant Treasurer stating
that:
(i) The representations, warranties and agreements of the
Adviser in Paragraph 1 are true and correct as of such Delivery Date
and the Adviser has complied with all its agreements contained
herein; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, (A) as of the Effective
Date, the Registration Statement did not include any untrue
statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and on such Delivery Date, the
Prospectus and any Omitting Prospectus do not include any untrue
statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date
of the Registration Statement, no event has occurred which should
have been set forth in a supplement to, or amendment of, the
Prospectus which has not been set forth in such a supplement or
amendment.
(g) The Company shall have furnished to the Representative on the
First Delivery Date and each Subsequent Delivery Date a letter of Coopers
& Lybrand, addressed to the Underwriters and dated such Delivery Date,
confirming that they are independent public accountants within the
meaning of the Acts and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, and stating, as of the date of such
letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial
<PAGE>26
information is given in the Prospectus, as of a date not more than five days
prior to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by its
letter delivered to the Representative concurrently with the execution of this
Agreement and confirming in all material respects the conclusions and findings
set forth in such prior letter.
(h) The shares of Stock being sold by the Company shall have been
listed on the New York Stock Exchange, Inc. no later than the opening of
trading on the New York Stock Exchange, Inc. on the first full day of
trading after the date of this Agreement.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to Simpson Thacher & Bartlett, counsel for the Underwriters.
9. Expenses. If the sale of the Stock provided for herein is not
consummated pursuant to the terms of Paragraph 3 or because of any failure,
refusal or inability on the part of the Company or the Adviser to perform any
agreement on its part to be performed or because any other condition of the
Underwriters' obligations herein is not fulfilled, the Company or the Adviser
shall reimburse the Underwriters for the reasonable fees and expenses of their
counsel and for such other out-of-pocket expenses as shall have been incurred
by them in connection with this Agreement and the proposed purchase of the
Stock, and upon demand the Company or the Adviser shall pay the full amount
thereof to the Representative. If this Agreement is terminated pursuant to
Paragraph 3 by reason of the default of one or more Underwriters, the Company
and the Adviser shall not be obligated to reimburse any defaulting Underwriter
on account of those expenses.
10. Notices. The Company and the Adviser shall be entitled to act
and rely upon any request, consent, notice or agreement given or made by the
Representative. Any notice by the Company or the Adviser to the Underwriters
shall be sufficient if given in writing or by telegraph addressed to Smith
Barney Shearson Inc., American Express Tower, World Financial Center, New
York, New York 10285, and any notice by the Underwriters to the Company shall
be sufficient if given in writing or by telegraph addressed to the Company at
Two World Trade Center, New York, New York 10048, Attention:
_____________________.
<PAGE>27
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company, the Adviser and their respective
successors. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons, except that (a) the representations,
warranties, indemnities and agreements of the Company and the Adviser
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act, and (b) the indemnity agreement of the
Underwriters contained in Paragraph 6 of this Agreement shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company.
Nothing in this Agreement is intended or shall be construed to give any person
other than the persons referred to in this Paragraph any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
12. Definition of "Business Day". For purposes of this Agreement,
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
14. Counterparts. This Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart, the executed
counterparts shall together constitute a single instrument.
15. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be a part of, or to affect the meaning
or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the
Company, the Adviser and the Underwriters, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
GREENWICH STREET MUNICIPAL FUND INC.
By:____________________________
Title:
<PAGE>28
SMITH BARNEY SHEARSON INC.
By:____________________________
Title:
Accepted:
SMITH BARNEY SHEARSON INC.
For itself and as Representative
for each of the several Underwriters
named in Schedule 1 hereto
By: SMITH BARNEY SHEARSON INC.
By:_______________________________
Title:
<PAGE>29
SCHEDULE 1
Number of
Shares of
Underwriter Firm Stock
Smith Barney Shearson Inc. ..............
Total................... 5,000,000
<PAGE>1
Exhibit (j)(1)
CUSTODY AGREEMENT
AGREEMENT dated as of , 1994, between GREENWICH STREET MUNICIPAL
FUND INC. a Maryland corporation (the "Fund"), having its principal office and
place of business at Two World Trade Center, New York, New York 10048 and
BOSTON SAFE DEPOSIT AND TRUST COMPANY (the "Custodian"), a Massachusetts trust
company with its principal place of business at One Boston Place, Boston,
Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Fund as now in effect and as may be amended from
time to time.
(b) "Authorized Person" shall be deemed to include the Chairman of
the Board of Directors, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, any Assistant Treasurer or any
other person, whether or not any such person is an officer or employee of
the Fund duly authorized by the Board of Directors of the Fund to give
Oral Instructions and Written Instructions on behalf of the Fund and
listed in the certification as may be received by the Custodian from time
to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(d) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Authorized
Persons or any two officers of the Custodian.
<PAGE>2
(e) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), its successor or successors and its nominee or
nominees, in which the Custodian is hereby specifically authorized to
make deposits. The term "Depository" shall further mean and include any
other person to be named in a Certificate authorized to act as a
depository under the 1940 Act, its successors and its nominee or
nominees.
(f) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations, where
the purchase or sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale, and repurchase
and reverse repurchase agreements with respect to any of the foregoing
types of securities.
(g) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(h) "Prospectus" shall mean the Fund's current prospectus relating
to the registration of the Fund's Shares under the Securities Act of
1933, as amended.
(i) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time owned
by the Fund, including forward currency contracts, futures contracts and
options on futures contracts.
(j) "Shares" refers to shares of common stock, $.001 par value per
share of the Fund.
(k) "Transfer Agent" shall mean the person which performs transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(l) "Written Instructions" shall mean a written communication
actually received by the Custodian from a person reasonably believed by
the Custodian to be an Authorized Person by any system where by the
receiver of such communication is able to verify through codes or
<PAGE>3
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.
(m) The "1940 Act" refers to the Investment Company Act of 1940, as
amended and the Rules and Regulations thereunder, all as amended from
time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies at any time owned by or in the
possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services
rendered under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein. Such Fee
Schedule does not include out-of-pocket disbursements of the Custodian for
which the Custodian shall be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to, the items specified
in the Schedule of Out-of-Pocket charges annexed hereto as Schedule B and
incorporated herein, which schedule may be modified from time to time by
attaching a revised Schedule of Out-of-Pocket Charges, dated and signed by an
Authorized Officer of each party hereto.
(b) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedule A of this Agreement a revised Fee Schedule,
dated and signed by an Authorized Officer or authorized representative of each
party hereto.
(c) The Custodian will bill the Fund as soon as practicable after
the end of each calendar month, and said billings will be detailed in
accordance with the Fee Schedule for the Fund. The Fund will promptly pay to
the Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets. The Fund will deliver or cause
to be delivered to the Custodian all Securities
<PAGE>4
and monies owned by it at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and monies until
actually received by it. The Fund shall instruct the Custodian from time to
time in its sole discretion, by means of Certificate, or, in connection with
the purchase or sale of Money Market Securities, by means of Oral Instructions
or Certificate, as to the manner in which and in what amounts Securities and
monies of the Fund are to be deposited on behalf of the Fund in the Book-Entry
System or the Depository and specifically allocated on the books of the
Custodian to the Fund; provided, however, that prior to the deposit of
Securities of the Fund in the Book-Entry System or the Depository, including a
deposit in connection with the settlement of a purchase or sale, the Fund
shall have received a Certificate specially approving such deposits by the
Custodian in the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for Customers,
including but not limited to accounts in which the Custodian acts in a
fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain an account for the Fund and shall credit to the Account of the Fund
all monies received by it for the account of such Fund and shall disburse the
same only:
1. In payment for Securities purchased for the Fund, as provided in
Section 5 hereof;
2. In payment of dividends or distributions with respect to the
Shares of the Fund, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the
Shares of the Fund, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund, as
provided in Section 8 hereof;
5. Pursuant to Certificates, or with respect to Money Market
Securities, Oral Instructions or Certificates, setting forth the name of
the Fund, the name and address of the person to whom the payment is to be
made, the amount to be paid and the purpose for which payment is to be
made; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided in
Section 11(h) hereof.
<PAGE>5
(c) Confirmation and Statements. Promptly after the close of
business on each day, the Custodian shall furnish the Fund with confirmations
and a summary of all transfers to or from the account of the Fund during said
day. Where securities purchased by the Fund are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or shown
on the custodian's account on the books of the Depository or the Book-Entry
System, the Custodian shall by book entry or otherwise identify the quantity
of those securities belonging to the Fund. At least monthly, the Custodian
shall furnish the Fund with a detailed statement of the Securities and monies
held for the Fund under this Agreement.
(d) Registration of Securities and Physical Separation. All
Securities held for the Fund that are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be held by
the Custodian in that form; all other Securities held for the Fund may be
registered in the name or the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund reserves the
right to instruct the Custodian as to the method of registration and
safekeeping of the Securities of the Fund. The Fund agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold or deliver
in proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository, any
Securities that it may hold for the account of the Fund and that may from time
to time by registered in the name of the Fund. The Custodian shall hold all
such Securities specifically allocated to the Fund which are not held in the
Book-Entry System or the Depository in a separate account for the Fund in the
name of the Fund physically segregated at all times from those of any other
person or persons.
(e) Segregated Accounts. Upon receipt of a Certificate, the
Custodian will establish segregated accounts on behalf of the Fund to hold
liquid or other assets as it shall be directed by a Certificate and shall
increase or decrease the assets in such Segregated Account only as it shall be
directed by subsequent Certificate.
(f) Collection of Income and Other Matters Affecting Securities.
Unless otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities
<PAGE>6
therein deposited, shall with respect to all Securities held for the Fund in
accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired, or
otherwise become payable. Notwithstanding the foregoing, the Custodian
shall have no responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to put bonds which
are owned by the Fund and held by the Custodian or its nominee, nor shall
the Custodian have any responsibility or liability to the Fund for any
loss by the Fund for any missed payments or other defaults resulting
therefrom, unless the Custodian receives timely notification from the
Fund specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its nominee.
The Custodian shall not be responsible and assumes no liability to the
Fund for the accuracy or completeness of any notification the Custodian
may furnish to the Fund with respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of ownership
upon the Federal income tax laws or the laws or regulations of any other
taxing authority now or hereafter in effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of the Fund all rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt
of a Certificate and not otherwise, except for subparagraphs 5, 6, 7, 8, 9 and
10 which may be effected by Oral or Written Instructions and confirmed by
Certificates, the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to
such persons as may be designated in such Certificates, proxies,
consents, authorizations and any other instruments whereby the Authority
of the Fund as owner of any Securities may be exercised;
<PAGE>7
2. Deliver or cause to be delivered any Securities held for the
Fund in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise of
any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the
Fund to any protection committee, reorganization committee or other
person in connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any corporation,
and receive and hold under the terms of this Agreement in the Fund's
account such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such
delivery;
4. Make or cause to be made such transfers or exchanges of Fund
assets and take such other steps as shall be stated in said Certificate
to be for the purpose effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recapitalization of
the Fund.
5. Deliver Securities owned by the Fund upon sale of such
Securities for the account of the Fund pursuant to Section 5;
6. Deliver Securities owned by the Fund upon the receipt of payment
in connection with any repurchase agreement related to such Securities
entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof or
its agent when such Securities are called, redeemed, retired or otherwise
become payable; provided, however, that in any such case the cash or
other consideration is to be delivered to the Custodian. Notwithstanding
the foregoing, the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or retirement dates with
respect to the put bonds which are owned by the Fund and held by the
Custodian or its nominee. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund for any
missed payments or other default resulting therefrom; unless the
Custodian received timely notification from the Fund specifying the time,
place and manner for the presentment of any such put bond owned by the
Fund and held by the Custodian or its nominee. The Custodian shall not
be
<PAGE>8
responsible and assumes no liability to the Fund for the accuracy or
completeness of any notification the Custodian may furnish to the Fund with
respect to put bonds;
8. Deliver Securities owned by the Fund for delivery in connection
with any loans of securities made by the Fund but only against receipt of
adequate collateral as agreed upon from time to time by the Custodian and
the Fund which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities;
9. Deliver securities owned by the Fund to the broker for
examination in accordance with the "street delivery" custom;
10. Deliver Securities owned by the Fund for delivery as security
in connection with any borrowings by the Fund requiring a pledge of Fund
assets, but only against receipt of amounts borrowed;
11. Deliver Securities owned by the Fund upon receipt of Written
Instructions from the Fund for the delivery to the Transfer Agent or to
the holders of Shares in connection with distributions in kind, as may be
described from time to time in the Fund's Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption;
12. Deliver Securities owned by the Fund as collateral in
connection with short sales by the Fund of common stock for which the
Fund owns the stock or owns preferred stocks or debt securities
convertible or exchangeable, without payment or further consideration,
into shares of the common stock sold short;
13. Deliver Securities owned by the Fund for any purpose expressly
permitted by and in accordance with procedures described in the Fund's
Prospectus; and
14. Deliver securities owned by the Fund for any other proper
business purpose, but only upon receipt of, in addition to Written
Instructions, a certified copy of a resolution of the Board of Directors
signed by an Authorized Person and certified by the Secretary or
Assistant Secretary of the Fund, specifying the Securities to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper business purpose, and naming
the person or persons to whom delivery of such Securities shall be made.
<PAGE>9
(h) Endorsement of Collection of Checks, Etc. The Custodian is
hereby authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of the
Fund; provided, however, that the Custodian shall not be liable for any money,
whether or not represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the Custodian
actually receives and collects such money directly or by the final crediting
of the account representing the Fund's interest in the Book-Entry System or
the Depository.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the
Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities that are not Money Market Securities, either written instructions
or oral instructions, and (ii) with respect to each purchase of Money Market
Securities, either Written Instructions or Oral Instructions, in either case
specifying with respect to each purchase: (1) the name of the Fund; (2) the
name of the issuer and title of securities; (3) the number of shares or
principal amount purchased, and accrued interest, if any; (4) the date of
purchase and settlement; (5) the purchase price per unit; (6) the total amount
payable upon such purchase; (7) the name of the person for whom or the broker
through whom the purchase was made, if any; (8) whether or not such purchase
is to be settled through the Book-Entry System or the Depository; and (9)
whether the Securities purchased are to be deposited in the Book-Entry System
or the Depository. The Custodian shall receive the Securities purchased by or
for the Fund and upon receipt of Securities shall pay out of the monies held
for the account of the Fund the total amount payable upon such purchase,
provided that the same conforms to the total amount payable as set forth in
such Written Instructions or Oral Instructions.
(b) Promptly after each sale of Securities of the Fund, the Fund
shall deliver to the Custodian (i) with respect to each sale of Securities
that are not Money Market Securities, Written Instructions, and (ii) with
respect to each sale of Money Market Securities, either Written Instructions
or Oral Instructions, in either case specifying with respect to such sale:
(1) the name of the Fund; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or principal amount sold, and accrued
interest, if any; (4) the date of the sale; (5) the sale price per unit; (6)
the total amount payable to the Fund upon such sale; (7) the name of the
broker through whom or the person to whom the sale was made; and (8) whether
or not such sale is to be settled through the Book-Entry
<PAGE>10
System or the Depository. The Custodian shall deliver or cause to be
delivered the Securities to the broker or other person designated by the Fund
upon receipt of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable to the Fund as set forth in
such Written Instructions or such Oral Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
6. Lending of Securities.
Within 24 hours after each loan of Securities, the Fund shall
deliver or cause to be delivered to the Custodian Written Instructions
specifying with respect to each such loan: (a) the name of the Fund; (b) the
name of the issuer and the title of the Securities; (c) the number of shares
or the principal amount loaned; (d) the date of loan and delivery; (e) the
total amount to be delivered to the Custodian, including the amount of cash
collateral and the premium, if any, separately identified; (f) the name of the
broker, dealer or financial institution to which the loan was made; and (g)
whether the Securities loaned are to be delivered through the Book-Entry
System or the Depository.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian Written Instructions specifying with respect to
each such loan termination and return of Securities: (a) the name of the
Fund; (b) the name of the issuer and the title of the Securities to be
returned; (c) the number of shares or the principal amount to be returned; (d)
the date of termination; (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Written Instructions); (f) the name of the
broker, dealer or financial institution to which such Securities were loaned
and upon receipt thereof shall pay the total amount payable upon such return
of Securities as set forth in the Written Instructions. Securities returned
to the Custodian shall be held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Directors of the Fund certified by the Secretary or
an Assistant Secretary (i) authorizing the declaration of dividends or
distributions, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined and the amount payable
per share to
<PAGE>11
the shareholders of record as of the record date of (ii) setting forth the
date of declaration of any dividend or distribution by the Fund, the date of
payment thereof, the record date as of which shareholders entitled to payment
shall be determined and the amount payable per share to the shareholders of
record as of the record date.
(b) Prior to the payment date specified in such resolution, Oral
Instructions or Written Instructions, as the case may be, the Fund shall
deliver to the Custodian Oral Instructions or Written Instructions specifying
the total amount payable to the Transfer Agent.
(c) Upon the payment date specified in such vote, Oral Instructions
or Written Instructions, as the case may be, the Custodian shall pay out the
monies held for the account of the Fund the total amount payable to the
Transfer Agent of the Fund.
8. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any
bank (excluding the Custodian) from which the Fund borrows money using
Securities as collateral for such borrowings, a notice or undertaking in the
form currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of collateral.
The Fund shall promptly deliver to the Custodian Written Instructions stating
with respect to each such borrowing: (1) the name of the Fund; (2) the name
of the bank; (3) the amount and terms of the borrowing, which may be set forth
by incorporating by reference an attached promissory note, duly endorsed by
the Fund, or other loan agreement; (4) the time and date, if known, on which
the loan is to be entered into (the "borrowing date"); (5) the date on which
the loan becomes due and payable; (6) the total amount payable to the Fund on
the borrowing date; (7) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities; (8)
whether the Custodian is to deliver such collateral through the Book-Entry
System or the Depository; and (9) a statement that such loan is in conformance
with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Written or Oral Instructions referred to in
subparagraph (a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable, provided
that the same conforms to the total amount payable as set forth in the
<PAGE>12
Written or Oral Instructions. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver as additional
collateral in the manner directed by the Fund from time to time such
Securities as may be specified in Written or Oral Instructions to
collateralize further any transaction described in this Section. The Fund
shall cause all Securities released from collateral status to be returned
directly to the Custodian, and the Custodian shall receive from time to time
such return of collateral as may be tendered to it. In the event that the
Fund fails to specify in Written or Oral Instructions all of the information
required by this Section, the Custodian shall not be under any obligation to
deliver any Securities. Collateral returned to the Custodian shall be held
hereunder as it was prior to being used as Collateral.
9. Persons Having Access to Assets of the Fund.
(a) No Director, officer, employee or agent of the Fund, or no
officer, director, employee or agent of the Adviser, shall have physical
access to the assets of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with the
Fund or the Adviser shall have access to the assets of the Fund.
(b) The individual employees of the Custodian duly authorized by
the Board of Directors of the Custodian to have access to the assets of the
Fund are listed in the certification annexed hereto as Appendix C. The
Custodian shall advise the Fund of any change in the individuals authorized to
have access to the assets of the Fund by written notice to the Fund
accompanied by a certified copy of the authorizing resolution of the
Custodian's Board of Directors approving such change.
(c) Nothing in this Section shall prohibit any officer, employee or
agent of the Fund, or any officer, director, employee or agent of the Adviser,
from giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or access
to assets of the Fund prohibited by paragraph (a) of this Section.
<PAGE>13
10. Concerning the Custodian.
(a) Standard of Conduct. Except as otherwise provided herein,
neither the Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may, with respect to
questions of law, apply for an obtain the advice and opinion of counsel to the
Fund or of its own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
the Depository arising by reason of any negligence, misfeasance or misconduct
on the part of the Custodian or any of its employees, sub-custodians or
agents.
(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to inquire into,
and shall not be liable for:
1. The validity of the issue of any Securities purchased by the
Fund, the legality of the purchase thereof, or the propriety of the
amount paid therefor;
2. The legality of the sale of any Securities by the Fund, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase of any Shares, or the propriety
of the amount to be paid therefor;
5. The legality of the declaration or payment of any dividend or
other distribution of the Fund; or
6. The legality of any borrowing for temporary or emergency
purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment of money,
received by it on behalf of the Fund until the Custodian actually receives and
collects such money directly or by the final crediting of the account
<PAGE>14
representing the Fund's interest in the Book-Entry System or the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
under any duty or obligation to take action to effect collection of any amount
due to the Fund from the Transfer Agent nor to take any action to effect
payment or distribution by the Transfer Agent in accordance with this
Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in default, of
if payment is refused after due demand or presentation unless and until (a) it
shall be directed to take such action by Written Instructions and (b) it shall
be assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action.
(f) Appointment of Sub-Custodians. The Custodian may appoint one
or more qualified institutions, including but not limited to banking
institutions, to act as Depository or Depositories or as Sub-Custodian or as
Sub-Custodians of Securities and monies at any time owned by the Fund, upon
terms and conditions specified in a Board Resolution the terms of which have
been mutually agreed upon from time to time by the Custodian and the Fund.
The Custodian shall use reasonable care in selecting any such Depository
and/or Sub-Custodian and shall oversee the maintenance of any Securities or
monies of the Fund by the Sub-Custodian or Depository. It is understood by
both parties that the use of any such sub-custodian will not affect any of the
Custodian's responsibilities to the Fund under this Agreement.
(g) Appointment of Agents. The Custodian may at any time or times
in its discretion appoint, and may at any time remove any other bank or trust
company which is itself qualified under the 1940 Act to act as a custodian, as
its agents to carry out such of the provisions of this Agreement as the
Custodian may from time to time direct.
(h) No Duty to Ascertain Authority. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held by
the Fund under the provisions of the Articles of Incorporation and the
Prospectus.
(i) Compensation of the Custodian. The Custodian shall be entitled
to receive, and the Fund agrees to pay to the Custodian, such compensation as
may be agreed upon from time to
<PAGE>15
time between the Custodian and the Fund. The Custodian may charge against any
moneys of the Fund held by it the amount of compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to this
Agreement. The Custodian shall also be entitled to charge against any money
of the Fund held by it the amount of any loss, damage, liability or expense
incurred with respect to the Fund, including counsel fees, for which it shall
be entitled to reimbursement under the provisions of this Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of Sub-Custodians incurred in
settling transactions outside of Boston, Massachusetts or New York, New York
involving the purchase and sale of Securities of the Fund.
(j) Reliance on Certificates and Instructions. The Custodian shall
be entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the Custodian to
be genuine and to be signed by two officers of the Fund. The Custodian shall
be entitled to rely upon any Written or Oral Instructions actually received by
the Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by an
Authorized Person. The Fund agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral Instructions in
such manner so that such Written Instructions are received by the Custodian,
whether by hand delivery, telex or otherwise, by the close of business on the
same day that such Oral Instructions are given to the Custodian. The Fund
agrees that the fact that such confirming instructions are not received by the
Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions given to the Custodian hereunder concerning such
transactions provided such instructions reasonably appear to have been
received from a duly Authorized Person.
11. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such a manner as will meet
the obligations of the Fund under the 1940 Act, with particular attention to
Section 31 thereof, Rules 31a-1 and 31a-2 thereunder, applicable federal and
state tax laws and any law or administrative rules or procedures which may be
applicable to the Fund. All such records shall be the
<PAGE>16
property of the Fund and shall at all times during regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set
forth above (the "Effective Date") and shall continue in effect thereafter as
the parties may mutually agree.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of receipt of
such notice. In the event such notice is given by the Fund, it shall be
accompanied by a certificate vote of the Board of Directors of the Fund,
electing to terminate this Agreement and designating a successor custodian or
custodians, which shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a certified vote of the
Board of Directors of the Fund, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian, which shall be a person qualified to so act
under the 1940 Act. If the Fund fails to designate a successor custodian, the
Fund shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the
Fund) and monies then owned by the Fund, be deemed to be its own custodian and
the Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to Securities
held in the Book-Entry System which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of
this Section, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian
all Securities and monies then held by the Custodian on behalf of the Fund,
after deducting all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of
<PAGE>17
the Directors, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Fund, individually, but are binding only upon
the assets and property of the Fund, as provided in the Articles of
Incorporation. The execution and delivery of this Agreement have been
authorized by the Directors of the Fund, and signed by an authorized officer
of the Fund, acting as such, and neither such authorization by such Directors
not such execution and delivery by such officer shall be deemed to have been
made by any of them or any shareholder of the Fund individually or to impose
any liability on any of them or any shareholder of the Fund personally, but
shall bind only the assets and property of the Fund as provided in the
Articles of Incorporation.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by two
of the present officers of the Fund setting forth the names and the signatures
of the present Authorized Persons. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event that any such
present Authorized Persons. The Fund agrees to furnish to the Custodian a new
certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last
delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary or an Assistant Secretary of the Fund setting forth the names and
the signatures of the present officers of the Fund. The Fund agrees to
furnish to the Custodian a new certification in similar form in the event any
such present officer ceases to be an officer of the Fund or in the event that
other or additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon the signature of the
officers as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at its
offices at One Boston Place, Boston, Massachusetts 02108 or at such other
place as the Custodian may from time to time designate in writing.
<PAGE>18
(d) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund, shall be sufficiently
given if addressed to the Fund and mailed or delivered to it at its offices at
Two World Trade Center, New York, New York 10048 or at such other place as the
Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board of
Directors of the Fund, including a majority of the members of the Board of
Directors of the Fund who are not "interested persons" of the Fund (as defined
in the 1940 Act), or (ii) authorized and approved by such other procedures as
may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
written consent of the Custodian, or by the Custodian without the written
consent of the Fund authorized or approved by a vote of the Board of Directors
of the Fund, and any attempted assignment without such written consent shall
be null and void.
(g) The Fund represents that a copy of the Articles of
Incorporation and By-laws is on file with the State of Maryland.
(h) This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(j) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
<PAGE>19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers duly authorized as of the day and
year first above written.
GREENWICH STREET MUNICIPAL FUND INC.
By:
Name:
Title:
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
By:
Name:
Title:
<PAGE>20
APPENDIX A
We, Vincent Nave, Treasurer and Francis J. McNamara, III, Secretary, of
Greenwich Street Municipal Fund Inc., a Maryland corporation (the "Fund"), do
hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Fund and
the signatures set forth opposite their respective names are their true and
correct signatures:
Name Signature
Robert Dwight
Diane Leone
John Hawke
Kristin Steadfast
Vincent Nave, Treasurer
Francis J. McNamara, III, Secretary
<PAGE>21
AFFIDAVIT OF SIGNATURES
I, Francis J. McNamara, III, Senior Vice President and General Counsel of
The Boston Company Advisors, Inc., do hereby certify that the signatures set
forth opposite the respective names of Robert Dwight, Diane Leone, John Hawke
and Kristin Steadfast are their true and correct signatures.
Name Signature
Robert Dwight
Diane Leone
John Hawke
Kristin Steadfast
Witness Francis J. McNamara, III
Date: Date:
<PAGE>22
APPENDIX B - OFFICERS
I, Lee D. Augsburger, Assistant Secretary of Greenwich Street Municipal
Fund Inc. a Maryland corporation (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position
and qualified therefor in conformity with the Fund's Articles of Incorporation
and the signatures set forth opposite their respective names are their true
and correct signatures:
Name Position Signature
Heath B. McLendon Chairman of the Board
Chief Executive Officer
and Investment Officer
Richard P. Roelofs President
Joseph Deane Vice President and
Investment Officer
David Fare Investment Officer
Vincent Nave Treasurer
Richard Rose Assistant Treasurer
Richard W. Ingram Assistant Treasurer
Francis J. McNamara Secretary
Lee D. Augsburger Assistant Secretary
Elizabeth Nystedt Assistant Secretary
Lee D. Augsburger, Assistant Secretary
<PAGE>23
APPENDIX C - INDIVIDUALS WITH ACCESS
I, Lynne E. Larkin, Secretary of Boston Safe Deposit and Fund Company, a
Massachusetts corporation (the "Custodian"), do hereby certify that:
The following named individuals have been duly authorized by the
Executive Committee of the Board of Directors of the Custodian to have access
to the assets of Greenwich Street Municipal Fund Inc., a Maryland corporation,
held by the Custodian in its capacity as such:
Kevin Connolly
Karen D. DeVitto
Joan M. Donahue
Eric Greene
Priscilla Hardy
Russell G. McAdams, II
Eleanor Millan
Cynthia Peluso
Geraldine E. Ryan
Virginia Shea
Merton E. Thompson, III
Lynne E. Larkin, Secretary
Boston Safe Deposit and Fund Company
<PAGE>24
SCHEDULE A
BOSTON SAFE DEPOSIT AND TRUST COMPANY
CUSTODY FEE SCHEDULE
A. Domestic Safekeeping:
First $50 million -.033%
Next $50 million -.017%
Excess -.010%
B. PLUS $5/security holding
charge per month
C. PLUS Transaction charges:
DTC eligible -$10
Non-DTC eligible -$30
Fed Book Entry -$10
Options -$25
Futures -$ 8
GNMA Paydowns -$ 5
Repo - depository -$10
- non-deposit -$17
Physical - Govt -$30
Physical - Corp/Muni -$30
Commercial paper -$30
Euro-CDs (London) -$30
<PAGE>25
BOSTON SAFE DEPOSIT AND TRUST COMPANY
GLOBAL CUSTODY FEE SCHEDULE
A. Global Safekeeping:
Group I Assets - 5.0 BP
* Group II Assets
First $50 million -12.0 BP
Next $50 million - 9.0 BP
Next $200 million - 6.0 BP
Excess - 4.0 BP
Group III Assets -12.0 BP
Group IV Assets -15.0 BP
Group V Assets -18.0 BP
Group VI Assets -25.0 BP
B. PLUS Transaction Charges:
Group I Transactions - $25
Group II Transactions - $30
Group III Transactions - $30
Group IV Transactions - $45
Group V Transactions - $60
Group VI Transactions - $75
** Third Pary F/X - $20
Country Groups
Group I Group II Group III Group IV Group V
Japan Euroclear Austria Australia Denmark
Cedel Canada Belgium Finland
Germany Netherlands France
Switzerland Hong Kong
Luxembourg Italy
Malaysia
Norway
Singapore
Thailand
Portugal
Ireland
United Kingdom
<PAGE>26
* The breakpoint levels are based upon assets within each category.
** A Third Pary F/X is one in which Boston Safe is not the currency broker.
This charge will be assessed only on transactions where funds are
actually transferred.
Reimbursable out-of-pocket expenses will be added to each monthly invoice
and will include, but not be limited to, such customary items as
telephone, wire charges ($5.25 per wire), stamp duties, securities
registration, postage, courier services and duplication charges.
<PAGE>27
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of each
month all out-of-pocket expenses reasonably incurred in connection with the
assets of the Fund.
<PAGE>1
Exhibit (j)(2)
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of _____________, 1994, between GREENWICH STREET
MUNICIPAL FUND INC. (the "Fund"), a corporation organized under the laws of
Maryland and having its principal place of business at Two World Trade Center,
New York, New York 10048, and THE SHAREHOLDER SERVICES GROUP, INC. (MA) (the
"Transfer Agent"), a corporation organized under the laws of Massachusetts and
having its principal offices at One Exchange Place, 53 State Street, Boston,
Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement or similar
organizational document, as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in a certificate furnished to the Transfer Agent pursuant to
Section 4(c) hereof as may be received by the Transfer Agent from time to
time.
(c) "Board of Directors" shall mean the Board of Directors, Board
of Trustees or, if the Fund is a limited partnership, the General Partner(s)
of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such a custodian
pursuant to a Custody Agreement.
(f) "Fund" shall mean the entity executing this Agreement and if it
is a series fund, as such term is used in the 1940 Act, such
<PAGE>2
term shall mean each series of the Fund hereafter created, except that
appropriate documentation with respect to each series must be presented to the
Transfer Agent before this Agreement shall become effective with respect to
each such series.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person.
(i) "Prospectus" shall mean the most recently dated Fund Prospectus
including any supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to partners
of limited partnerships.
(k) "Shares" refers collectively to such shares of capital stock,
beneficial interest or limited partnership interests, as the case may be, of
the Fund as may be issued from time to time and, if the Fund is a closed-end
or a series fund, as such terms are used in the 1940 Act any other classes or
series of capital stock, shares of beneficial interest or limited partnership
interests that may be issued from time to time.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing agent for
the Fund and as plan agent under the Fund's Dividend Reinvestment Plan. The
Transfer Agent accepts such appointments and agrees to perform the duties
hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to be
compensated for the performance of its obligations hereunder in accordance
with the fees set forth in the written schedule of fees annexed hereto as
Schedule A and incorporated herein. The Transfer
<PAGE>3
Agent will transmit an invoice to the Fund as soon as practicable after the
end if each calendar month which will be detailed in accordance with Schedule
A, and the Fund will pay to the Transfer Agent the amount of such invoice
within thirty (30) days after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by the Transfer
Agent in the performance of its duties hereunder. Out-of-pocket expenses
shall include, but shall not be limited to, the items specified in the written
schedule of out-of-pocket charges annexed hereto as Schedule B and
incorporated herein. Unspecified out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by the Transfer Agent in the
performance of its obligations hereunder. Reimbursement by the Fund for
expenses incurred by the Transfer Agent in any month shall be made as soon as
practicable but no later than fifteen (15) days after the receipt of an
itemized bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedule A, a revised fee schedule executed and dated
by the parties hereto.
4. Documents. In connection with the appointment of the Transfer
Agent, the Fund shall deliver or cause to be delivered to the Transfer Agent
the following documents on or before the date this Agreement goes into effect,
but in any case within a reasonable period of time for the Transfer Agent to
prepare to perform its duties hereunder:
(a) If applicable, specimens of certificates for Shares of the
Fund;
(b) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(c) A signature card bearing the signatures of any Authorized
Person who will sign Written Instructions or is authorized to give Oral
Instructions to the Transfer Agent on behalf of the Fund;
(d) A certified copy of the Fund's Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors authorizing
the execution and delivery of this Agreement;
<PAGE>4
(g) A certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each Shareholder, and the number
of Shares of the Fund held by each, certificate numbers and denominations (if
any certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefore, and the
number of Shares redeemed by the Fund; and
(h) An opinion of counsel for the Fund with respect to the validity
of the Shares and the status of such Shares under the Securities Act of 1933,
as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same become
available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund and all
pre-effective and post-effective amendments thereto filed with the Commission;
(c) a certified copy of each resolution of the Board of Directors
or other authorization designating Authorized Persons; and
(d) such other certificates, documents or opinions as the Transfer
Agent may reasonably request in connection with the performance of its duties
hereunder.
6. Representations. The Fund represents to the Transfer Agent that all
outstanding Shares are validly issued, fully paid and non-assessable. When
Shares are hereafter issued in accordance with the terms of the Fund's
Articles of Incorporation and its Prospectus, such Shares shall be validly
issued, fully paid and non-assessable. The Transfer Agent represents that it
is and will continue to be registered as a transfer agent under the Securities
Exchange Act of 1934.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares, the Fund
shall deliver or cause to be delivered to the Transfer Agent written notice of
such declaration signed on behalf of the Fund by an officer thereof, upon
which the Transfer Agent shall be entitled to rely for all purposes,
certifying (i) the identity of the Shares involved, (ii) the number of Shares
involved, and (iii) that all appropriate action has been taken.
<PAGE>5
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions typically
performed by a transfer agent; for acting as service agent in connection with
dividend and distribution functions and as plan agent under the Fund's
Dividend Reinvestment Plan; and for performing shareholder account and
administrative agent functions in connection with the issuance, transfer and
redemption or repurchase (including coordination with the Custodian) of Shares
in accordance with the terms of the Prospectus and applicable law. The
operating standards and procedures to be followed shall be determined from
time to time by agreement between the Fund and the Transfer Agent and shall
initially be as described in Schedule C attached hereto. In addition, the
Fund shall deliver to the Transfer Agent all notices issued by the Fund with
respect to the Shares in accordance with and pursuant to the Articles of
Incorporation and By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of Incorporation
including the giving of notice of any special or annual meetings of
shareholders and any other notices required thereby.
9. Record Keeping and Other Information.
(a) The Transfer Agent shall create and maintain all records
required of it pursuant to its duties hereunder and as set forth in Schedule C
in accordance with all applicable laws, rules and regulations, including
records required by Section 31(a) of the 1940 Act. All records shall be
available during regular business hours for inspection and use by the Fund.
Where applicable, such records shall be maintained by the Transfer Agent for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
(b) Upon reasonable notice by the Fund, the Transfer Agent shall
make available during regular hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as
may be necessary for the Fund to evaluate the quality of the services
performed by the Transfer Agent pursuant hereto.
(c) The Transfer Agent and the Fund agree that the records kept by
the Transfer Agent in compliance with the federal securities and applicable
tax laws remain the property of the Fund and, upon the termination of this
Agreement, the Transfer Agent shall, at the Fund's expense, provide such
records to the Fund or such successor transfer agent as the Fund designates in
writing to the Transfer Agent.
10. Other Duties. In addition to the duties set forth in Schedule C,
the Transfer Agent shall perform such other duties and functions, and shall be
paid such amounts therefor, as may from time
<PAGE>6
to time be agreed upon in writing between the Fund and the Transfer Agent.
The compensation for such other duties and functions shall be reflected in a
written amendment to Schedule A or B and the duties and functions shall be
reflected in an amendment to Schedule C, both dated and signed by authorized
persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent will have no liability when acting upon
Written or Oral Instructions reasonably believed to have been executed or
orally communicated by an Authorized Person and will not be held to have any
notice of any change of authority of any person until receipt of a Written
Instruction thereof from the Fund pursuant to Section 4(c). The Transfer
Agent will also have no liability when processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of the Transfer Agent.
(b) At any time, the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions and may seek advice from legal
counsel for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with the opinion of counsel for the
Fund or, with the consent of the Fund, counsel for the Transfer Agent.
Written Instructions requested by the Transfer Agent will be provided by the
Fund within a reasonable period of time. In addition, the Transfer Agent, its
officers, agents or employees, shall accept Oral Instructions or Written
Instructions given to them by any person representing or acting on behalf of
the Fund only if said representative is an Authorized Person. The Fund agrees
that all Oral Instructions shall be followed within one business day by
confirming Written Instructions, and that the Fund's failure to so confirm
shall not impair in any respect the Transfer Agent's right to rely on Oral
Instructions. The Transfer Agent shall have no duty or obligation to inquire
into, nor shall the Transfer Agent be responsible for, the legality of any act
done by it upon the request or direction of a person reasonably believed by
the Transfer Agent to be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor; (ii)
the legality of the redemption of any Shares, or the propriety of the amount
to be paid therefor, (iii) the legality of the declaration of any dividend by
the Board of Directors, or the legality of the issuance of any Shares in
payment of any dividend; or
<PAGE>7
(iv) the legality of any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by Acts of God or by reason of circumstances
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties, mechanical breakdown, insurrection, war,
riots, or failure or unavailability of transportation, communication or power
supply, fire, flood or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party") will indemnify the other party (the "Indemnified Party")
against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses of any sort or kind (including reasonable counsel fees
and expenses) resulting from any claim, demand, action or suit or other
proceeding (a "Claim") under this Agreement, unless such Claim has resulted
from a negligent failure to act or omission to act or bad faith of the
Indemnified Party in the performance of its duties hereunder. In addition,
the Fund will indemnify the Transfer Agent against and hold it harmless from
any Claim, damages, liabilities or expenses (including reasonable counsel
fees) that is a result of: (i) any action taken in accordance with Written or
Oral Instructions, or any other instructions, or share certificates reasonably
believed by the Transfer Agent to be genuine and to be signed, countersigned
or executed, or orally communicated by an Authorized Person; (ii) any action
taken in accordance with written or oral advice reasonably believed by the
Transfer Agent to have been given by counsel for the Fund or its own counsel;
or (iii) any action taken as a result of any error or omission in any record
(including but not limited to magnetic tapes, computer printouts, hard copies
and microfilm copies) delivered, or caused to be delivered by the Fund to the
Transfer Agent in connection with this Agreement.
In any case in which the Indemnifying Party may be asked to indemnify or
hold the Indemnified Party harmless, the Indemnifying Party shall be advised
of all pertinent facts concerning the situation in question. The Indemnified
Party will notify the Indemnifying Party promptly after identifying any
situation which it believes presents or appears likely to present a claim for
indemnification against the Indemnifying Party although the failure to do so
shall not prevent recovery by the Indemnified Party. The Indemnifying Party
shall have the option to defend the Indemnified Party against any Claim which
may be the subject of this indemnification, and, in the event that the
Indemnifying Party so elects, such defense shall be conducted by counsel
chosen by the Indemnifying Party and satisfactory to the Indemnified Party,
and thereupon the Indemnifying Party shall take over complete defense of the
Claim and the Indemnified Party shall sustain no further legal or other
expenses in respect of such Claim.
<PAGE>8
The Indemnified Party will not confess any claim or make any compromise in any
case in which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The obligations
of the parties hereto under this Section shall survive the termination of this
Agreement.
14. Consequential Damages. In no event and under no circumstances shall
either party under this Agreement be liable to the other party for indirect
loss of profits, reputation or business or any other special damages under any
provision of this Agreement or for any act or failure to act hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first written
above and thereafter shall automatically continue for successive annual
periods ending on the anniversary of the date first written above, provided
that it may be terminated by either party upon written notice given at least
60 days prior to termination.
(b) In the event a termination notice is given by the Fund, it
shall be accompanied by a resolution of the Board of Directors, certified by
the Secretary of the Fund, designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Fund, the Transfer
Agent will deliver to such successor a certified list of Shareholders of the
Fund (with names and addresses), and all other relevant books, records,
correspondence and other Fund records or data in the possession of the
Transfer Agent, and the Transfer Agent will cooperate with the Fund and any
successor transfer agent or agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other
party, except as may be required by applicable law or at the request of the
Commission or other governmental agency. The parties further agree that a
breach of this provision would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in its
discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Transfer Agent shall not relieve the Transfer Agent of its responsibilities
hereunder.
<PAGE>9
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized by this
Agreement to be given in writing to the Fund or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate
in writing.
To the Fund:
Greenwich Street Municipal Fund Inc.
Two World Trade Center
New York, New York 10048
Attention: Heath McLendon, President
with a copy to Fund Counsel
To the Transfer Agent:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to Transfer Agent Counsel.
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns,
provided, however, that this Agreement shall not be assigned to any person
other than a person controlling, controlled by or under common control with
the assignor without the written consent of the other party, which consent
shall not be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed exclusively by
the laws of the State of New York without reference to the choice of law
provisions thereof. Each party hereto hereby (i) agrees that the Supreme
Court of New York sitting in New York County shall have exclusive jurisdiction
over any and all disputes arising hereunder; (ii) consents to the personal
jurisdiction of such court over the parties hereto, hereby waiving any defense
of lack of personal jurisdiction; and (iii) appoints the person to whom
notices hereunder are to be sent as agent for service of process.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
<PAGE>10
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not use the name
of the Transfer Agent in any Prospectus, shareholders' report, sales
literature or other material relating to the Fund in a manner not approved
prior thereto in writing; provided, that the Transfer Agent need only receive
notice of all reasonable uses of its name which merely refer in accurate terms
to its appointment hereunder or which are required by any government agency or
applicable law or rule. Notwithstanding the foregoing, any reference to the
Transfer Agent shall include a statement to the effect that the Transfer Agent
is a wholly owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the name
of the Fund or material relating to the Fund on any documents or forms for
other than internal use in a manner not approved prior thereto in writing;
provided, that the Fund need only receive notice of all reasonable uses of its
name which merely refer in accurate terms to the appointment of the Transfer
Agent or which are required by any government agency or applicable law or
rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements. If any provision is held to be illegal, unenforceable or invalid
for any reason, the remaining provisions shall not be affected or impaired
thereby.
<PAGE>11
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, as of the day and
year first above written.
GREENWICH STREET MUNICIPAL FUND INC.
By:____________________________
Title:_________________________
THE SHAREHOLDER SERVICES GROUP, INC.
By:____________________________
Title:_________________________
<PAGE>12
Schedule A
Annual Transfer Agent Fee: $8.50 per account
(but not less than
$12,000.00 total)
New Account Establishment $2.50 per account
Certificate Issuance $1.50 per issuance
A-1
<PAGE>13
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable out-
of-pocket expenses, including, but not limited to, the following items:
- Microfiche/microfilm production
- Magnetic media tapes
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, bar-coding, first class) direct pass
through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease, maintenance
and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communications lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including, but not
limited to, exit fees charged by third party record keeping vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred by the Transfer
Agent in performing its duties and responsibilities under this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with the Transfer Agent. In addition, the
Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.
B-1
<PAGE>14
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent shall
maintain a record of the number of Shares held by each holder of record which
shall include name, address, taxpayer identification and which shall indicate
whether such Shares are held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from Shareholders
and others relating to its duties hereunder and such other correspondence as
may from time to time be mutually agreed upon between the Transfer Agent and
the Fund. The Transfer Agent shall provide the Fund with reports concerning
shareholder inquiries and the responses thereto by the Transfer Agent, in such
form and at such times as are agreed to by the Fund and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer Agent
or its agent with an adequate supply of blank share certificates to meet the
Transfer Agent's or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees that,
notwithstanding the death, resignation, or removal of any officer of the Fund
whose signature appears on such certificates, the Transfer Agent or its agent
may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and lost certificate bonds, in form satisfactory to the
Transfer Agent or its agent, with the Fund and the Transfer Agent or its agent
as obligee under the bond.
(c) The Transfer Agent or its agent shall also maintain a record of
each certificate issued, the number of Shares represented thereby and the
holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect thereof,
including their names, addresses and taxpayer identification. The Transfer
Agent or its agent shall further maintain a stop transfer record on lost
and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to Shareholders
<PAGE>15
of the Fund, all reports to Shareholders, dividend and distribution notices
and proxy material for the Fund's meetings of Shareholders. In connection
with meetings of Shareholders, the Transfer Agent or its agent will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
5. Transfer and Repurchase.
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as the Transfer Agent or its agent
reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or repurchase Shares until it is
satisfied that the requested transfer or repurchase is legally authorized, and
it shall incur no liability for the refusal, in good faith, to make transfers
or repurchases which the Transfer Agent or its agent, in its good judgment,
deems improper or unauthorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer or repurchase.
(b) Notice to Custodian and Fund. When Shares are redeemed, the
Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be repurchased.
Such repurchased Shares shall be reflected on appropriate accounts maintained
by the Transfer Agent or its agent reflecting outstanding Shares of the Fund
and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian, all
in accordance with the procedures described in the Written Instruction
received by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or affect any
repurchase with respect to Shares of the Fund after receipt by the
<PAGE>16
Transfer Agent or its agent of notification of the suspension of the
determination of the net asset value of the Fund.
6. Dividends.
(a) Notice to Agent and Custodian. Upon the declaration of each
dividend and each capital gains distribution by the Board of Directors of the
Fund with respect to Shares of the Fund, the Fund shall furnish or cause to be
furnished to the Transfer Agent or its agent a copy of a resolution of the
Fund's Board of Directors certified by the Secretary of the Fund setting forth
the date of the declaration of such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per Share to the
shareholders of record as of that date, the total amount payable to the
Transfer Agent or its agent on the payment date and whether such dividend or
distribution is to be paid in Shares of such class at net asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Custodian of the Fund will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such
payment date.
(b) Insufficient Funds for Payments. If the Transfer Agent or its
agent does not receive sufficient cash from the Custodian to make total
dividend and/or distribution payments to all shareholders of the Fund as of
the record date, the Transfer Agent or its agent will, upon notifying the
Fund, withhold payment to all Shareholders of record as of the record date
until sufficient cash is provided to the Transfer Agent or its agent.
<PAGE>17
Exhibit 1
to
Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent shall be as
follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each Shareholder
account as received:
Name and Address (Zip Code)
Class of Shares
Taxpayer Identification Number
Balance of Shares held by Transfer Agent
Beneficial Owner code; i.e., male, female, joint tenant, etc.
Dividend code (reinvestment)
Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
Answer written inquiries relating to Shareholder accounts (matters
relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Fund).
Process dividends and disbursements into established Shareholder
accounts in accordance with Written Instructions from the Transfer
Agent.
Upon receipt of proper instructions and all required documentation,
process requests for repurchase of Shares.
Identify redemption requests made with respect to accounts in which
Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to
such purchase and process as agreed by the Transfer Agent in
accordance with written instructions set forth by the Fund.
Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
Issue and mail replacement checks.
<PAGE>18
Open new accounts and maintain records of exchanges between
accounts.
C. DIVIDEND ACTIVITY
Calculate and process Share dividends and distributions as
instructed by the Fund.
Compute, prepare and mail all necessary reports to Shareholders of
various authorities as requested by the Fund. Report to the Fund
reinvestment plan share purchases and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
Cause to be mailed proxy and related material for all meeting of
Shareholders. Tabulate returned proxies (proxies must be adaptable
to mechanical equipment of the Transfer Agent or its agents) and
supply daily reports when sufficient proxies have been received.
Prepare and submit to the Fund an Affidavit of Mailing.
At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if requested
by the Fund, Inspection of Election.
E. PERIODIC ACTIVITIES
Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to mechanical
equipment of the Transfer Agent or its agent).
