Exhibit (e)

 

Blackstone / GSO Senior Floating Rate Term Fund

 

FORM OF DIVIDEND REINVESTMENT PLAN

 

1. The Bank of New York Mellon (“BNY”), will act as agent (“Agent”) for the participating shareholders (the “Participants”) of Blackstone / GSO Senior Floating Rate Term Fund (the “Fund”), and will open an account for each of the Participants under the Dividend Reinvestment Plan (the “Plan”) in the name of the record owner in which shares of the Fund’s common shares of beneficial interest, par value $0.001 per share (“Common Shares”) are registered, and put into effect for the Participants the distribution reinvestment provisions of the Plan.  Shareholders must elect to participate in the Plan.  Dividends will be reinvested for all Participants pursuant to the Plan, unless a shareholder terminates its account pursuant to Section 9 below.

 

2. If the Fund declares a distribution payable either in Common Shares or in cash, non-participants in the Plan will receive Common Shares (in the case of a stock distribution) or cash (in the case of a cash distribution), and Participants will receive Common Shares (in the case of a stock distribution) or, in the case of a cash distribution, the equivalent amount in Common Shares valued in the following manner: if the market price of the Common Shares plus any brokerage commission on the determination date is equal to or exceeds 98% of the net asset value per share of the Common Shares, BNY will acquire shares directly from the Fund at a price equal to the greater of (i) 98% of the net asset value per share at the valuation time on the determination date or (ii) 95% of the market price per share of the Common Shares on that date. If 98% of the net asset value per share of the Common Shares exceeds the market price of the Common Shares plus any brokerage commission on the determination date, BNY will buy Common Shares in the open market, on the New York Stock Exchange or elsewhere, for the Participants’ accounts as soon as practicable commencing on the trading day following the determination date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the record date for the next succeeding dividend or distribution to be made to the holders of the Common Shares; except when necessary to comply with applicable provisions of the federal securities laws. If during this period (i) the market price plus any brokerage commission rises so that it equals or exceeds 98% of the net asset value per share of the Common Shares at the valuation time before BNY has completed the open market purchases or (ii) if BNY is unable to invest the full amount eligible to be reinvested hereunder in open market purchases during the time period referred to in the previous sentence, BNY shall cease purchasing shares in the open market and the Fund shall issue the remaining shares of Common Shares at a price per share equal to the greater of (i) 98% of the net asset value per share at the valuation time on such date or (ii) 95% of the then current market price per share of Common Shares.

 

3. For all purposes of the Plan: (a) the valuation time will be the close of trading on the New York Stock Exchange on the determination date for the relevant dividend or distribution; (b) the determination date will be the payable date for determining shareholders eligible to receive the relevant dividend or distribution, except that if such day is not a New York Stock Exchange trading day, it will be the immediately preceding

 

 

trading day; (c) the market price of the Fund’s Common Shares on a particular date shall be the mean between the highest and lowest sales prices on the New York Stock Exchange on that date, or, if there is no sale on such Exchange on that date, then the mean between the closing bid and asked quotations for such stock on such Exchange on such date; (d) the net asset value per share of the Fund’s Common Shares as of the valuation time on a particular date shall be as determined by or on behalf of the Fund; and (e) all distributions and other payments shall be made net of any applicable withholding tax.

 

4. The open market purchases provided for above may be made on any securities exchange where the Fund’s Common Shares is traded, in the over-the-counter market or in negotiated transactions, and may be on such terms as to price, delivery and otherwise as BNY shall determine. Participant funds held by BNY pending investment will not bear interest, and it is understood that, in any event, BNY shall have no liability in connection with any inability to purchase shares within the time period for open market purchases, as herein provided, or with respect to the timing of any purchases effected. BNY shall have no responsibility as to the value of the Common Shares of the Fund acquired for a Participant’s account. In connection with open market purchases, BNY may commingle a Participant’s funds with those of other Participants and the average price (including brokerage commissions) of all shares purchased by BNY as Agent shall be the price per share allocable to each Participant in connection therewith.

 

5. BNY may hold shares acquired pursuant to the Plan, together with the shares of other Participants acquired pursuant to the Plan, in noncertificated form in BNY’s name or that of BNY’s nominee. BNY will forward to Participants any proxy solicitation material and will vote any shares so held for any Participant only in accordance with instructions given through a proxy executed by the Participant. Upon a Participant’s written request, BNY will deliver to him, without charge, a certificate or certificates for the full shares.

 

6. BNY will confirm to each Participant each acquisition made for his account as soon as practicable but not later than 30 days after the date thereof. Although Participants may from time to time have an undivided fractional interest (computed to six decimal places) in a share of Common Shares, no certificates for a fractional share will need to be issued. However, distributions on fractional shares will be credited to Participant accounts. In the event of the termination of a Participant’s account under the Plan, BNY will adjust for any such undivided fractional interest in cash at the market value of the Fund’s shares at the time of termination less the pro rata expense of any sale required to make such an adjustment.

 

7. Any stock dividends or split shares distributed by the Fund on shares held by BNY for a Participant will be credited to his account. In the event that the Fund makes available to its shareholders rights to purchase additional shares or other securities, the shares held for a Participant under the Plan will be added to other shares held by such Participant in calculating the number of rights to be issued to him.  Transaction processing may either be curtailed or suspended until completion of any stock dividend, stock split or corporate action.

 

 

8. No service fee for handling the reinvestment of capital gains distributions or income dividends will be charged to Participants or their accounts.  Participants will be charged a pro rata share of any brokerage commissions actually incurred on open market purchases.

 

9. A Participant may terminate his account under the Plan by notifying BNY in writing at, BNY Mellon Shareowner Services, Attn: Sales Dept., P O Box 358035, Pittsburgh, PA 15252. Such termination may be effective immediately if notice is received by BNY not less than ten business days prior to any dividend or distribution record date; otherwise such termination may be effective as soon as practicable after BNY’s investment of the most recently declared dividend or distribution on the Common Shares. The Plan may be terminated by the Fund upon notice in writing mailed to all Participants at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination is to be effective. Upon any termination BNY will cause a certificate or certificates for the full shares held for each Participant under the Plan and cash adjustment for any fractional shares to be delivered to each Participant without charge. If a Participant elects to notify BNY in advance of such termination to have BNY sell part or all of his shares and remit the proceeds to him, BNY is authorized to deduct brokerage commissions actually incurred for this transaction from the proceeds and a $10.00 service fee.

 

10. These terms and conditions may be amended or supplemented by 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 Participants appropriate written notice at least 30 days prior to the effective date of such amendment or supplement and only upon BNY’s receipt of the written consent of the Fund’s Board of Trustees. The amendment or supplement shall be deemed to be accepted by Participants unless, prior to the effective date thereof, BNY receives written notice of the termination of a Participant’s account under the Plan. Any such amendment may include an appointment by BNY in BNY’s 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 distributions, the Fund will be authorized to pay such successor agent, for a Participant’s account, all distributions payable on Common Shares of the Fund held in his name under the Plan for retention or application by such successor agent as provided in these terms and conditions.

 

11. BNY shall at all times act in good faith and agree to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement and to comply with applicable law, but BNY assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by its negligence, bad faith or willful misconduct of BNY or its employees.

 

12. These terms and conditions shall be governed by the laws of the State of New York.

 

Exhibit (g)

 

FORM OF INVESTMENT ADVISORY AGREEMENT

 

This Investment Advisory Agreement, dated and effective as of May [ · ], 2010, is made by and between Blackstone / GSO Senior Floating Rate Term Fund, a Delaware statutory trust (herein referred to as the “Fund”) and GSO / Blackstone Debt Funds Management LLC, a Delaware limited liability company (herein referred to as the “Adviser”) (this “Agreement”).

 

1. Appointment of Adviser.  The Adviser hereby undertakes and agrees, upon the terms and conditions herein set forth, to provide overall investment management services for the Fund and in connection therewith to: (i) supervise the Fund’s investment program, including advising and consulting with the Fund’s board of trustees (the “Board of Trustees”) regarding the Fund’s overall investment strategy; (ii) make, in consultation with the Fund’s Board of Trustees, investment strategy decisions for the Fund; (iii) manage the investing and reinvesting of the Fund’s assets; (iv) place purchase and sale orders on behalf of the Fund; (v) advise the Fund with respect to all matters relating to the Fund’s use of leveraging techniques; (vi) provide or procure the provision of research and statistical data to the Fund in relation to investing and other matters within the scope of the investment objective and limitations of the Fund; (vii) monitor the performance of the Fund’s outside service providers, including the Fund’s administrator, transfer agent and custodian; (viii) be responsible for compliance by the Fund with U.S. federal, state and other applicable laws and regulations; and (ix) pay the salaries, fees and expenses of such of the Fund’s trustees, officers or employees who are trustees, officers or employees of the Adviser or any of its affiliates, except that the Fund will bear travel expenses or an appropriate portion thereof of trustees and officers of the Fund who are trustees, officers or employees of the Adviser to the extent that such expenses relate to attendance at meetings of the Board of Trustees or any committees thereof.  The Adviser may delegate any of the foregoing responsibilities to a third party with the consent of the Fund.  The Fund acknowledges that the Adviser makes no warranty that any investments made by the Adviser hereunder will not depreciate in value or at any time not be affected by adverse tax consequences, nor does it give any warranty as to the performance or profitability of the assets or the success of any investment strategy recommended or used by the Adviser.

 

2. Expenses .  In connection herewith, the Adviser agrees to maintain a staff within its organization to furnish the above services to the Fund.  The Adviser shall bear all expenses arising out of its duties hereunder.

 

Except as provided in Section 1 hereof, the Fund shall be responsible for all of the Fund’s expenses and liabilities, including organizational and offering expenses (which include out-of-pocket expenses, but not overhead or employee costs of the Adviser); expenses for legal, accounting and auditing services; taxes and governmental fees; dues and expenses incurred in connection with membership in investment company organizations; fees and expenses incurred in connection with listing the Fund’s shares on any stock exchange; costs of printing and distributing shareholder reports, proxy materials, prospectuses, stock certificates, if any, and distribution of dividends; charges of the Fund’s custodians and sub-custodians, administrators and sub-administrators, registrars, transfer agents, dividend disbursing agents and dividend

 

 

reinvestment plan agents; payment for portfolio pricing services to a pricing agent, if any; registration and filing fees of the Securities and Exchange Commission (the “Commission”); expenses of registering or qualifying securities of the Fund for sale in the various states; freight and other charges in connection with the shipment of the Fund’s portfolio securities; fees and expenses of non-interested trustees or non-interested members of any advisory or investment board, committee or panel of the Fund; travel expenses or an appropriate portion thereof of trustees and officers of the Fund, or members of any advisory or investment board, committee or panel of the Fund, to the extent that such expenses relate to attendance at meetings of the Board of Trustees or any committee thereof, or of any such advisory or investment board, committee or panel; salaries of shareholder relations personnel; costs of shareholders meetings; insurance; interest; brokerage costs; and litigation and other extraordinary or non-recurring expenses.

 

3. Transactions with Affiliates .  The Adviser is authorized on behalf of the Fund, from time to time when deemed to be in the best interests of the Fund and to the extent permitted by applicable law, to purchase and/or sell securities in which the Adviser or any of its affiliates underwrites, deals in and/or makes a market and/or may perform or seek to perform investment banking services for issuers of such securities.  The Adviser is further authorized, to the extent permitted by applicable law, to select brokers (including any brokers affiliated with the Adviser) for the execution of trades for the Fund.

 

4. Best Execution; Research Services .  The Adviser is authorized, for the purchase and sale of the Fund’s portfolio securities, to employ such dealers and brokers as may, in the judgment of the Adviser, implement the policy of the Fund to obtain the best results, taking into account such factors as price, including dealer spread, the size, type and difficulty of the transaction involved, the firm’s general execution and operational facilities and the firm’s risk in positioning the securities involved.  Consistent with this policy, the Adviser is authorized to direct the execution of the Fund’s portfolio transactions to dealers and brokers furnishing statistical information or research deemed by the Adviser to be useful or valuable to the performance of its investment advisory functions for the Fund.  It is understood that in these circumstances, as contemplated by Section 28(e) of the Securities Exchange Act of 1934, as amended, the commissions paid may be higher than those which the Fund might otherwise have paid to another broker if those services had not been provided.  Information so received will be in addition to and not in lieu of the services required to be performed by the Adviser.  It is understood that the expenses of the Adviser will not necessarily be reduced as a result of the receipt of such information or research.  Research services furnished to the Adviser by brokers who effect securities transactions for the Fund may be used by the Adviser in servicing other investment companies, entities or funds and accounts which it manages.  Similarly, research services furnished to the Adviser by brokers who effect securities transactions for other investment companies, entities or funds and accounts which the Adviser manages may be used by the Adviser in servicing the Fund.  It is understood that not all of these research services are used by the Adviser in managing any particular account, including the Fund.

 

The Adviser and its affiliates may aggregate purchase or sale orders for the assets with purchase or sale orders for the same security for other clients’ accounts of the Adviser or of its affiliates, the Adviser’s own accounts and hold proprietary positions in accordance with its current aggregation and allocation policy (collectively, the “Advisory Clients”), but only if (x) in the Adviser’s reasonable judgment such aggregation results in an overall economic or other

 

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benefit to the assets taking into consideration the advantageous selling or purchase price, brokerage commission and other expenses and factors and (y) the Adviser’s actions with respect to aggregating orders for multiple Advisory Clients, as well as the Fund, are consistent with applicable law.  However, the Adviser is under no obligation to aggregate any such orders under any circumstances.

 

5. Remuneration .  In consideration of the services to be rendered by the Adviser under this Agreement, the Fund shall pay the Adviser a monthly fee in United States dollars on the fifth business day of each month for the previous month at an annual rate of 1.00% of the Fund’s Managed Assets.  “Managed Assets” means the total assets of the Fund (including assets attributable to money borrowed for investment purposes, including assets attributable to any preferred stock that may be outstanding) minus the sum of the Fund’s accrued liabilities (other than Fund liabilities incurred for the express purpose of creating leverage).  If the fee payable to the Adviser pursuant to this Section 5 begins to accrue before the end of any month or if this Agreement terminates before the end of any month, the fee for the period from such date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.  For purposes of calculating each such monthly fee, the value of the Fund’s net assets shall be computed at the time and in the manner specified in the Registration Statement on Form N-2, as in effect from time to time, filed with the Commission under the Investment Company Act of 1940, as amended (the “1940 Act”), and the Securities Act of 1933, as amended.

 

6. Representations and Warranties .  The Adviser represents and warrants that it is duly registered and authorized as an investment adviser under the Investment Advisers Act of 1940, as amended, and the Adviser agrees to maintain effective all material requisite registrations, authorizations and licenses, as the case may be, until the termination of this Agreement.

 

7. Services Not Deemed Exclusive .  The Fund acknowledges and agrees that:

 

(a)           the services provided hereunder by the Adviser are not to be deemed exclusive, and the Adviser and any of its affiliates or related persons are free to render similar services to others and to use the research developed in connection with this Agreement for other Advisory Clients or affiliates.  The Fund agrees that the Adviser may give advice and take action with respect to any of its other Advisory Clients which may differ from advice given or the timing or nature of action taken with respect to any client or account so long as it is the Adviser’s policy, to the extent practicable, to allocate investment opportunities to the client or account on a fair and equitable basis relative to its other Advisory Clients.  It is understood that the Adviser shall not have any obligation to recommend for purchase or sale any loans which its principals, affiliates or employees may purchase or sell for its or their own accounts or for any other client or account if, in the opinion of the Investment Adviser, such transaction or investment appears unsuitable, impractical or undesirable for the Fund.  Nothing herein shall be construed as constituting the Adviser an agent of the Fund;

 

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(b)           circumstances may arise under which the Adviser determines there is a limited supply or demand for a particular security.  Under such circumstances, the Adviser shall allocate such security to the Fund and other Advisory Clients in accordance with its then-current aggregation and allocation policy and in a fair and equitable manner consistent with its fiduciary duties owed to the Fund and such other Advisory Clients.  In circumstances where the Adviser has determined to purchase or sell any security or make or dispose of any other investment of an Advisory Client’s funds and believes, in its reasonable judgment, that such investment would be appropriate for the assets, then, consistent with its fiduciary duties and applicable law, the Adviser may, but is not obligated, to cross the relevant transactions between the other Advisory Client’s account and the assets;

 

(c)           as a regular part of the restructuring and advisory practice of an affiliate of the Investment Adviser (the “Restructuring Affiliate”), the Restructuring Affiliate advises debtors and creditors in connection with out-of-court debt restructurings and workouts and with bankruptcy proceedings.  The Restructuring Affiliate also serves as advisor to official creditor committees established pursuant to such proceedings.  In situations in which an issuer of an Investment (or a creditor or group of creditors of such issuer) is a client or potential client of the restructuring and reorganization advisory practice (any such investment, a “Conflicted Investment”), the Adviser sell the Conflicted Investment to the extent deemed advisable by the Restructuring Affiliate, in consultation with the Adviser’s compliance officer, in order to avoid actual or perceived conflicts of interest with the restructuring and reorganization advisory practice, whether or not such disposition would otherwise be in the best interests of the Fund.  Further, there may also be instances in which the work of the restructuring and reorganization advisory practice prevents the Adviser from purchasing an investment. Notwithstanding anything to the contrary contained elsewhere herein, due to certain confidentiality obligations which the Restructuring Affiliate may be subject to, the Adviser shall not be obligated to inform the Fund at the time of any sale of Conflicted Investments; and

 

(d)           the Adviser and its members, partners, officers, directors and employees shall devote as much of their time to the activities of the Fund as they deem necessary and appropriate.  The services of the Adviser and its affiliates are not exclusive and the Adviser and its affiliates are not restricted from forming additional investment funds, from entering into other investment advisory relationships or from engaging in other business activities, even though such activities may be in competition with the Fund or may involve substantial time and resources of the Adviser.

 

8. Limit of Liability .  The Adviser shall exercise its best judgment in rendering the services in accordance with the terms of this Agreement.  The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Fund in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Fund or its shareholders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties (“disabling conduct”).  . The Adviser may consult with counsel and accountants in respect of the Fund’s affairs and shall be fully protected and justified in any action or inaction which is taken in accordance with the advice or opinion of such counsel and accountants; provided, that such

 

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counsel or accountants were selected with reasonable care.  The Fund will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser.  Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before which the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of trustees of the Fund who are neither “interested persons” of the Fund nor parties to the proceeding (“disinterested non-party trustees”) or (b) an independent legal counsel in a written opinion.  The Adviser shall be entitled to advances from the Fund for payment of the reasonable expenses (including reasonable counsel fees and expenses) incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under law.  Prior to any such advance, the Adviser shall provide to the Fund a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Fund has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met.  In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Fund for its undertaking; (b) the Fund is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party trustees or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Fund at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.  The Adviser shall not be liable hereunder or otherwise for any loss due to the mistake, action, inaction, negligence, dishonesty, fraud or bad faith of any broker or other agent; provided, that such broker or other agent shall have been selected, engaged or retained and monitored by the Adviser with in good faith, unless such action or inaction was made by reason of willful misfeasance, bad faith or gross negligence of its obligations and duties hereunder, or in the case of a criminal action or proceeding, where the Adviser had reasonable cause to believe its conduct was unlawful.

 

9. Duration and Termination .  This Agreement shall remain in effect until May [ · ], 2012, and shall continue in effect thereafter for successive annual periods, but only so long as such continuance is specifically approved at least annually by the affirmative vote of (i) a majority of the members of the Fund’s Board of Trustees who are not parties to this Agreement or “interested persons” (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (ii) the Fund’s Board of Trustees or the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund.

 

Notwithstanding the above, this Agreement is terminable with respect to the Fund without penalty by the Board of Trustees of the Fund or by vote of a majority of the outstanding voting securities of the Fund, in each case on not more than 60 days’ nor less than 30 days’ written notice to the Adviser, or by the Adviser upon not less than 90 days’ written notice to the Fund, and will be terminated upon the mutual written consent of the Investment Adviser and the

 

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Fund .  This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act”).

 

10. Governing Law .  This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of New York, provided ,  however , that nothing herein shall be construed as being inconsistent with the 1940 Act.

 

11. Notices .  Any notice hereunder shall be in writing and shall be delivered in person or by telex or facsimile (followed by delivery in person) to the parties at the addresses set forth below.

 

If to the Fund:

 

Blackstone / GSO Senior Floating Rate Term Fund

280 Park Avenue, 11 th  Floor
New York, New York 10017

Attn:   Daniel H. Smith, Jr., Trustee, Chief Executive Officer and President

 

If to the Adviser:

 

GSO / Blackstone Debt Funds Management LLC
280 Park Avenue, 11 th  Floor
New York, New York 10017

Attn:   Marisa Beeney, General Counsel

 

or to such other address as to which the recipient shall have informed the other party in writing.

 

Unless specifically provided elsewhere, notice given as provided above shall be deemed to have been given, if by personal delivery, on the day of such delivery, and, if by facsimile and mail, on the date on which such facsimile or mail is sent.

 

12. Miscellaneous .  The Fund acknowledges receipt of Part II of the Adviser’s Form ADV filed with the Securities and Exchange Commission pursuant to Section 203(c) of the Advisers Act, which states information relative to the Adviser’s investment and brokerage policies and other important matters, and which the Investment Adviser warrants is the current filing of such form, at least 48 hours prior to the execution of this Agreement, as required by Rule 204-3 under the Advisers Act..

 

13. Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the parties hereto caused their duly authorized signatories to execute this Agreement as of the day and year first written above.

 

 

	BLACKSTONE / GSO SENIOR FLOATING RATE TERM FUND
	By:
		Name:	Daniel H. Smith, Jr.
		Title:	Trustee, President and Chief Executive Officer
	GSO / BLACKSTONE DEBT FUNDS MANAGEMENT LLC
	By:
		Name:
		Title:

 

Exhibit 99(h)(1)

 

 

[   ] Shares

 

 

BLACKSTONE / GSO SENIOR FLOATING RATE TERM FUND

 

 

COMMON SHARES OF BENEFICIAL INTEREST, $0.001 PAR VALUE

 

 

UNDERWRITING AGREEMENT

 

 

May [   ], 2010

 

 

May [   ], 2010

 

Morgan Stanley & Co. Incorporated

Citigroup Global Markets Inc.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

UBS Securities LLC

Wells Fargo Securities, LLC

as representatives of the several

Underwriters named in Schedule I hereto

c/o Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

New York, New York 10036

UBS Securities LLC

299 Park Avenue

New York, New York 10171

Wells Fargo Securities, LLC

375 Park Avenue

New York, New York 10152

 

Ladies and Gentlemen:

 

Blackstone / GSO Senior Floating Rate Term Fund, a statutory trust organized under the laws of the State of Delaware (the “ Fund ”), is a newly organized, non-diversified closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “ Investment Company Act ”).  The Fund proposes to issue and sell to the several Underwriters named in Schedule I hereto (the “ Underwriters ”) [   ] common shares of beneficial interest, $0.001 par value per share (the “ Firm Shares ”).  The Fund also proposes to issue and sell to the several Underwriters not more than an additional [   ] common shares of beneficial interest, $0.001 par value per share

 

 

(the “ Additional Shares ”) if and to the extent that you, as managers of the offering, shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares granted to the Underwriters in Section 3 hereof.  The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “ Shares .”  The common shares of beneficial interest, $0.001 par value per share, of the Fund to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the “ Common Shares .”

 

GSO / Blackstone Debt Funds Management LLC (the “ Adviser ”) acts as the Fund’s investment adviser pursuant to an Investment Advisory Agreement between the Adviser and the Fund (the “ Investment Advisory Agreement ”).

 

The Fund has filed with the Securities and Exchange Commission (the “ Commission ”) a notification on Form N-8A (the “ Notification ”) of registration of the Fund as an investment company and a registration statement on Form N-2, including a prospectus and a statement of additional information incorporated by reference in the prospectus, relating to the Shares.  The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “ Securities Act ”), is hereinafter referred to as the “ Registration Statement ”; the prospectus in the form first used to confirm sales of Shares and filed with the Commission in accordance with Rule 497 of the Securities Act, including the statement of additional information incorporated therein by reference, is hereinafter referred to as the “ Prospectus .”  If the Fund has filed an abbreviated registration statement to register additional Common Shares pursuant to Rule 462(b) under the Securities Act (the “ Rule 462 Registration Statement ”), then any reference herein to the term “ Registration Statement ” shall be deemed to include such Rule 462 Registration Statement.  The Investment Company Act and the Securities Act are hereinafter referred to collectively as the “ Acts ,” and the rules and regulations of the Commission under the Acts and under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) are hereinafter referred to collectively as the “ Rules and Regulations .”

 

For purposes of this Agreement, “ Omitting Prospectus ” means any advertisement used with the written consent of the Fund in the public offering of the Shares pursuant to Rule 482 of the Rules and Regulations and “ Time of Sale Prospectus ” means the preliminary prospectus, dated April 30, 2010, including the statement of additional information incorporated therein by reference, each Omitting Prospectus, if any, identified on Schedule II hereto as being part of the Time of Sale Prospectus and the pricing information set forth as Schedule III hereto, all considered together.  As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time of Sale Prospectus” and Prospectus shall include the documents, if any, incorporated by reference therein, including the statement of additional information.

 

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1.             Representations and Warranties of the Fund and the Adviser .  The Fund and the Adviser, jointly and severally, represent and warrant to and agree with each of the Underwriters that:

 

(a)       The Fund meets the requirements for the use of Form N-2 under the Acts as established by General Instruction A of Form N-2.  The Registration Statement has become effective under the Securities Act; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the knowledge of the Fund or the Adviser, threatened by the Commission.

 

(b)      (i) The Registration Statement, when it became effective under the Securities Act, did not contain and, as amended or supplemented, if applicable, will not contain any 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, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Acts and the applicable Rules and Regulations thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers did not, and at the Closing Date (as defined in Section 5) will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (iv) the Prospectus, as amended or supplemented, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Fund in writing by such Underwriter through you expressly for use therein.

 

(c)       The Fund has been duly organized, is validly existing as a statutory trust in good standing under the laws of the State of Delaware, has the power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the condition (financial or otherwise), business prospects, earnings, business or properties of the Fund, whether or not arising from transactions in the

 

3

 

ordinary course of business of the Fund (a “Fund Material Adverse Effect”).  The Fund has no subsidiaries.

 

(d)      The Fund is registered with the Commission as a non-diversified, closed-end management investment company under the Investment Company Act and no order of suspension or revocation of such registration has been issued or proceedings therefor initiated or, to the knowledge of the Fund or the Adviser, threatened by the Commission.  No person is serving or acting as an officer or trustee of, or investment adviser to, the Fund except in accordance with the provisions of the Investment Company Act and the Investment Advisers Act of 1940, as amended (the “ Advisers Act ”).  Except as otherwise disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, no trustee of the Fund is an “interested person” of the Fund or, to the knowledge of the Fund or the Adviser, an “affiliated person” of any Underwriter (each as defined in the Investment Company Act).

 

(e)       Each of this Agreement, the Investment Advisory Agreement, the Marketing, Administration, Bookkeeping and Pricing Services Agreement between ALPS Fund Services, Inc. (the “ Administrator ”), the Adviser and the Fund (the “ Administration Agreement ”), the Distribution Assistance Agreement between ALPS Distributors, Inc. (the “ Distributor ”) and the Fund (the “ Distribution Agreement ”), the Custody Agreement between The Bank of New York Mellon (the “ Custodian ”) and the Fund (the “ Custodian Agreement ”), the Service Agreement for Transfer Agent Services between Mellon Investor Services LLC (the “ Transfer Agent ”) and the Fund (the “ Transfer Agency Agreement ”) and the Plan Administration Agreement between The Bank of New York Mellon and the Fund (the “ Plan Administration Agreement ”) (this Agreement, the Investment Advisory Agreement, the Administration Agreement, the Distribution Agreement, the Custodian Agreement, the Transfer Agency Agreement and the Plan Administration Agreement being referred to herein collectively as the “ Fundamental Agreements ”) has been duly authorized, executed and delivered by the Fund and complies with all applicable provisions of the Acts, the Advisers Act and the applicable Rules and Regulations.  The Fund has adopted the Dividend Reinvestment Plan (the “ Plan ”).  Each Fundamental Agreement, other than this Agreement, assuming due authorization, execution and delivery by the other parties thereto, and the Plan is a valid and binding agreement of the Fund, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

 

(f)       None of (i)  the execution and delivery by the Fund of, and the performance by the Fund of its obligations under, each Fundamental

 

4

 

Agreement or the adoption by the Fund of the Plan, or (ii)  the issue and sale by the Fund of the Shares as contemplated by this Agreement contravenes or will contravene (a) the agreement and declaration of trust (as amended, restated or supplemented, the “ Declaration of Trust ”) and by-laws (as amended, restated or supplemented, the “ By-Laws ”) of the Fund, (b) any agreement or other instrument binding upon the Fund or (c) any provision of applicable law, judgment, order or decree of any governmental body, agency or court having jurisdiction over the Fund, whether foreign or domestic, except, in the case of (b) and (c) above, where such contravention does or would not have a Fund Material Adverse Effect.  No consent, approval, authorization, order or permit of, or qualification with, any governmental body or agency, self-regulatory organization or court or other tribunal, whether foreign or domestic, is required for the performance by the Fund of its obligations under the Fundamental Agreements or the Plan, except such as have been obtained and as may be required by the Acts, the Advisers Act, the Exchange Act, or the applicable Rules and Regulations, or by the securities or Blue Sky laws of the various states and foreign jurisdictions in connection with the offer and sale of the Shares, or such as which the failure to obtain would neither have (i) a Fund Material Adverse Effect or (ii) an adverse effect on the consummation of the transactions contemplated by this Agreement or on any Underwriter.

 

(g)      The authorized capital stock of the Fund conforms in all material respects to the description thereof contained in each of the Time of Sale Prospectus and the Prospectus, and the Declaration of Trust and By-Laws of the Fund, the Fundamental Agreements and the Plan conform in all material respects to the descriptions thereof contained in each of the Time of Sale Prospectus and the Prospectus.

 

(h)      The Declaration of Trust and By-Laws of the Fund, the Fundamental Agreements and the Plan comply with all applicable provisions of the Acts and the applicable Rules and Regulations, and all approvals of such documents required under the Investment Company Act by the Fund’s shareholders and Board of Trustees have been obtained and are in full force and effect.

 

(i)        The Fundamental Agreements (other than this Agreement) and the Plan are in full force and effect and the Fund is not in default thereunder, and no event has occurred which with the passage of time or the giving of notice or both would constitute a default thereunder, except to the extent that such default would not have a Fund Material Adverse Effect.  The Fund is not currently in default under any other written agreement or instrument to which it or its property is bound or affected, except to the extent that such default would not have a Fund Material Adverse Effect.

 

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(j)        The Common Shares outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable.

 

(k)       The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of the Shares will not be subject to any preemptive or similar rights.

 

(l)        The Shares and any Common Shares outstanding prior to the issuance of the Shares have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.  The Fund’s registration statement on Form 8-A under the Exchange Act is effective.

 

(m)      Each Omitting Prospectus (i) complies with the requirements of Rule 482 of the Rules and Regulations, (ii) does not contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading, (iii) complied and will comply in all material respects with the Acts, the Rules and Regulations and the rules and regulations of the Financial Industry Regulatory Authority (“ FINRA ”) and (iv) if required to be filed with FINRA, has been delivered to the Underwriters for filing with FINRA and FINRA has issued no objections with respect to such Omitting Prospectuses.  Except for the Omitting Prospectuses, if any, identified on Schedule II hereto, the Fund has not prepared, used or referred to and will not, without your prior written consent, prepare, use or refer to any Omitting Prospectuses.

 

(n)      The Fund intends to direct the investment of the proceeds of the offering described in the Time of Sale Prospectus and the Prospectus in such a manner as to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the Fund intends to qualify as a regulated investment company under Subchapter M of the Code.

 

(o)      There has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), business prospects, earnings, business or properties of the Fund from that set forth in the Time of Sale Prospectus, and there have been no transactions entered into by the Fund which are material to the Fund other than those in the ordinary course of its business or as described in the Time of Sale Prospectus.

 

(p)      There are no legal or governmental proceedings pending or, to the knowledge of the Fund, threatened to which the Fund is a party or to which any of the properties of the Fund is subject (i) other than proceedings accurately described in all material respects in the Time of

 

6

 

Sale Prospectus and proceedings that would not have a Fund Material Adverse Effect, or an adverse effect on the power or ability of the Fund to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus or (ii) that are required to be described in the Registration Statement or the Prospectus and are not so described; and there are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required by the Acts and the applicable Rules and Regulations.

 

(q)      The Fund has all necessary consents, authorizations, approvals, orders (including exemptive orders), certificates and permits of and from, and has made all declarations and filings with, all governmental authorities, self-regulatory organizations and courts and other tribunals, whether foreign or domestic, to own and use its assets and to conduct its business in the manner described in the Time of Sale Prospectus and the Prospectus, except to the extent that the failure to obtain or file the foregoing would not have a Fund Material Adverse Effect.

 

(r)       Each preliminary prospectus (including the statement of additional information incorporated therein by reference) filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 497 of the Rules and Regulations, complied when so filed in all material respects with the Acts and the applicable Rules and Regulations.

 

(s)       The statement of assets and liabilities included in the Registration Statement, the Time of Sale Prospectus and the Prospectus presents fairly the financial position of the Fund as of the date indicated and said statement has been prepared in conformity with generally accepted accounting principles.  Deloitte & Touche LLP, whose report appears in the Time of Sale Prospectus and the Prospectus and who have certified the financial statements and supporting schedules, if any, included in the Registration Statement, is an independent registered public accounting firm as required by the Acts and the applicable Rules and Regulations.

 

(t)       There are no material restrictions, limitations or regulations with respect to the ability of the Fund to invest its assets as described in the Time of Sale Prospectus and the Prospectus, other than as described therein.

 

(u)      All advertisements authorized in writing by the Fund for use in the offering of the Shares complied and will comply with the requirements of the Acts, the applicable Rules and Regulations and the rules and regulations of FINRA and there are no such advertisements other

 

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than (i) any Omitting Prospectuses identified in Schedule II hereto and (ii) any advertisement that complies with Rule 135a of the Rules and Regulations.

 

(v)      There are no contracts, agreements or understandings between the Fund and any person granting such person the right to require the Fund to file a registration statement under the Securities Act with respect to any securities of the Fund or to require the Fund to include such securities with the Shares registered pursuant to the Registration Statement.

 

(w)      The expense summary information set forth in the Time of Sale Prospectus and the Prospectus under the caption “Summary of Fund Expenses” has been prepared in accordance with the requirements of Form N-2 and any fee projections or estimates, if applicable, are reasonably based.

 

(x)       Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Fund has not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Fund has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock (other than, in the event this representation and warranty is made after the Closing Date, ordinary and customary dividends declared and payable after the Closing Date); and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Fund except in each case as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, respectively.

 

(y)      The Fund does not own any real property and the Fund does not hold under lease any real property or buildings.

 

(z)       The Fund owns or possesses, or can acquire on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by it, and the Fund has not received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Fund Material Adverse Effect.

 

(aa)     The Fund maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are

 

8

 

executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the Time of Sale Prospectus, since the date of the Fund’s most recent audited financial statements included or incorporated by reference in the Prospectus, there has been (i) no material weakness in the Fund’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Fund’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

 

(bb)    Neither the Fund nor any employee nor agent of the Fund has made any payment of funds of the Fund or received or retained any funds, which payment, receipt or retention is of a character to be disclosed in the Time of Sale Prospectus, the Prospectus or the Registration Statement.

 

(cc)     Neither the Fund nor any of its subsidiaries or affiliates, nor any director, officer, or employee, nor, to the Fund’s knowledge, any agent or representative of the Fund or of any of its subsidiaries or affiliates, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Fund and its subsidiaries and affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.

 

(dd)    The operations of the Fund are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable

 

9

 

 

anti-money laundering statutes of jurisdictions where the Fund conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Anti-Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Fund or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Fund, threatened.

 

(ee)                             (i)  The Fund represents that neither the Fund nor any of its subsidiaries, nor any trustee, officer, or employee thereof, nor, to the Fund’s knowledge, any agent, affiliate or representative of the Fund or any of its subsidiaries, is an individual or entity (“ Fund Person ”) that is, or is owned or controlled by a Fund Person that is:

 

(A)  the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“ UNSC ”), the European Union (“ EU ”), Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), nor

 

(B)  located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).

 

(ii)  The Fund represents and covenants that it will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Fund Person:

 

(A)  to fund or facilitate any activities or business of or with any Fund Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

 

(B)  in any other manner that will result in a violation of Sanctions by any Fund Person (including any Fund Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

 

(iii)  The Fund represents and covenants that, for the past 5 years, it and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Fund Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

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(ff)                   To the knowledge of the Fund and the Adviser, the Transfer Agent is duly enrolled as a participant in the Fast Automated Transfer Program (FAST) of The Depository Trust Company (“ DTC ”).

 

2.                              Representations and Warranties of the Adviser .  The Adviser represents and warrants to and agrees with each of the Underwriters that:

 

(a)                     The Adviser has been duly formed, is validly existing as a limited liability company in good standing under the laws of the State of Delaware, has the limited liability power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the condition (financial or otherwise), business prospects, earnings, business, properties, management or personnel of the Adviser, whether or not arising from transactions in the ordinary course of business of the Adviser (an “Adviser Material Adverse Effect”).  The Adviser has no subsidiaries.

 

(b)                    The Adviser is duly registered as an investment adviser under the Advisers Act, and is not prohibited by the Advisers Act or the Investment Company Act from acting under the Investment Advisory Agreement as an investment adviser to the Fund as contemplated by the Time of Sale Prospectus, and no order of suspension or revocation of such registration has been issued or proceedings therefor initiated or, to the knowledge of the Adviser, threatened by the Commission.

 

(c)                     Each of this Agreement, the Investment Advisory Agreement, the Administration Agreement, the Marketing and Structuring Fee Agreement between Morgan Stanley & Co. Incorporated and the Adviser (the “ Morgan Stanley Fee Agreement ”), the Structuring Fee Agreement between Citigroup Global Markets Inc. and the Adviser (the “ Citi Fee Agreement ”), the Structuring Fee Agreement between Merrill Lynch, Pierce, Fenner & Smith Incorporated and the Adviser (the “ Merrill Lynch Fee Agreement ”), the Structuring Fee Agreement between UBS Securities LLC and the Adviser (the “ UBS Fee Agreement ”) and the Structuring Fee Agreement between Wells Fargo Securities, LLC and the Adviser (the “ Wells Fargo Fee Agreement ,” and together with the Morgan Stanley Fee Agreement, the Citi Fee Agreement, the Merrill Lynch Fee Agreement and the UBS Fee Agreement, the “ Fee Agreements ”) (this Agreement, the Investment Advisory Agreement, the Administration Agreement and the Fee Agreements are referred to herein, collectively, as the “ Adviser Agreements ”) has been duly authorized, executed and delivered by the Adviser and complies with all applicable

 

11

 

provisions of the Acts, the Advisers Act and the applicable Rules and Regulations.  Each of the Adviser Agreements, other than this Agreement, assuming due authorization, execution and delivery by the other parties thereto, is a valid and binding agreement of the Adviser, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and by equitable principles of general applicability.

 

(d)                    The execution and delivery by the Adviser of, and the performance by the Adviser of its obligations under the Adviser Agreements will not contravene (i) the certificate of formation or by-laws of the Adviser, (ii) any agreement or other instrument binding upon the Adviser or (iii) any provision of applicable law, judgment, order or decree of any governmental body, agency or court having jurisdiction over the Adviser, whether foreign or domestic, except, in the case of (ii) and (iii) above, where such contravention does or would not have an Adviser Material Adverse Effect.  No consent, approval, authorization, order or permit of, or qualification with, any governmental body or agency, self-regulatory organization or court or other tribunal, whether foreign or domestic, is required for the performance by the Adviser of its obligations under the Adviser Agreements, except such as have been obtained and as may be required by the Acts, the Advisers Act, the Exchange Act or the applicable Rules and Regulations, or by the securities or Blue Sky laws of the various states and foreign jurisdictions in connection with the offer and sale of the Shares, or such as which the failure to obtain would neither have (i) an Adviser Material Adverse Effect or (ii) an adverse effect on the consummation of the transactions contemplated by this Agreement or on any Underwriter.

 

(e)                     There are no legal or governmental proceedings pending or, to the knowledge of the Adviser, threatened to which the Adviser is a party or to which any of the properties of the Adviser is subject (i) other than proceedings accurately described in all material respects in the Time of Sale Prospectus and proceedings that would not have an Adviser Material Adverse Effect, or an adverse effect on the power or ability of the Adviser to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus or (ii) that are required to be described in the Registration Statement or the Prospectus and are not so described; and there are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required.

 

(f)                       The Adviser has all necessary consents, authorizations, approvals, orders (including exemptive orders), certificates and permits of and from, and has made all declarations and filings with, all governmental

 

12

 

authorities, self-regulatory organizations and courts and other tribunals, whether foreign or domestic, to own and use its assets and to conduct its business in the manner described in the Time of Sale Prospectus, except to the extent that the failure to obtain or file the foregoing would not have a Fund Material Adverse Effect or an Adviser Material Adverse Effect.

 

(g)                    The Adviser has the financial resources available to it necessary for the performance of its services and obligations as contemplated in the Time of Sale Prospectus and by the Adviser Agreements.

 

(h)                    The Investment Advisory Agreement is in full force and effect and the Adviser is not in default thereunder, and no event has occurred which with the passage of time or the giving of notice or both would constitute a default thereunder, except to the extent that such default would not have an Adviser Material Adverse Effect.

 

(i)                        The description of the Adviser and its business and the statements attributable to the Adviser in the Registration Statement, the Time of Sale Prospectus and Prospectus, including, without limitation, the description of the Adviser, does not, and on the Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading.

 

(j)                        There has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the condition (financial or otherwise), business prospects, earnings, business, properties, management or personnel of the Adviser from that set forth in the Time of Sale Prospectus, and there have been no transactions entered into by the Adviser which are material to the Adviser other than those in the ordinary course of its business or as described in the Time of Sale Prospectus.

 

(k)                     Neither the Adviser nor any of its subsidiaries or affiliates, nor any director, officer, or employee, nor, to the Adviser’s knowledge, any agent or representative of the Adviser or of any of its subsidiaries or affiliates, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Adviser and its subsidiaries and affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to

 

13

 

maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.

 

(l)                        The operations of the Adviser and its subsidiaries are and have been conducted at all times in material compliance with the Anti-Money Laundering Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Adviser or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Adviser, threatened.

 

(m)             (i)  The Adviser represents that neither the Adviser nor any of its subsidiaries, nor any director, officer, or employee thereof, nor, to the Adviser’s knowledge, any agent, affiliate or representative of the Adviser or any of its subsidiaries, is an individual or entity (“ Adviser Person ”) that is, or is owned or controlled by a Adviser Person that is:

 

(A)  the subject of any Sanctions, nor

 

(B)  located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).

 

(ii)  The Adviser represents and covenants that it will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Adviser Person:

 

(A)  to fund or facilitate any activities or business of or with any Adviser Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

 

(B)  in any other manner that will result in a violation of Sanctions by any Adviser Person (including any Adviser Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

 

(iii)  The Adviser represents and covenants that, for the past 5 years, it and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Adviser Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

3.                              Agreements to Sell and Purchase.  The Fund hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions

 

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hereinafter stated, agrees, severally and not jointly, to purchase from the Fund the respective numbers of Firm Shares set forth in Schedule I hereto opposite its name at $19.10 a share (the “ Purchase Price ”).

 

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Fund agrees to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, up to [   ] Additional Shares at the Purchase Price.  You may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving written notice not later than 45 days after the date of this Agreement.  Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased.  Each purchase date must be at least one business day after the written notice is given and may not be earlier than the closing date for the Firm Shares nor later than ten business days after the date of such notice.  Additional Shares may be purchased as provided in Section 5 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares.  On each day, if any, that Additional Shares are to be purchased (an “ Option Closing Date ”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.

 

The Fund hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Wells Fargo Securities, LLC on behalf of the Underwriters, it will not, during the period ending 180 days after the date of the Prospectus, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Shares, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares; provided, however , that the Fund may issue and sell Common Shares pursuant to the Plan.  Notwithstanding the foregoing, if (x) during the last 17 days of the 180-day restricted period the Fund issues an earnings release or material news or a material event relating to the Fund occurs, or (y) prior to the expiration of the 180-day restricted period, the Fund announces that it will release earnings results during the 16-day period beginning on the last

 

15

 

day of the 180-day period, the restrictions imposed in this clause shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.  The Fund will provide Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Wells Fargo Securities, LLC, on behalf of the Underwriters, with prior notice of any such announcement that gives rise to an extension of the restricted period. The agreements contained in this paragraph shall not apply to the Shares to be sold hereunder or any Common Shares issued pursuant to the Plan.

 

4.                              Terms of Public Offering .  The Fund and the Adviser are advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable.  The Fund and the Adviser are further advised by you that the Shares are to be offered to the public initially at $20.00 a share (the “ Public Offering Price ”), and to certain dealers selected by you at a price that represents a concession not in excess of $0.60 a share under the Public Offering Price.

 

5.                              Payment and Delivery.  Payment for the Firm Shares shall be made to the Fund in Federal or other funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 A.M. (New York City time), on May [28], 2010, or at such other time on the same or such other date, not later than June [14], 2010, as shall be designated in writing by you.  The time and date of such payment are hereinafter referred to as the “ Closing Date .”

 

Payment for any Additional Shares shall be made to the Fund in Federal or other funds immediately available in New York City against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 A.M. (New York City time), on the date specified in the corresponding notice described in Section 3 or at such other time on the same or on such other date, in any event not later than July [23], 2010, as shall be designated in writing by you.

 

The Firm Shares and Additional Shares shall be registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be.  The Firm Shares and Additional Shares shall be delivered to you through the facilities of DTC on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price therefor.

 

6.                              Conditions to the Underwriters’ Obligations .  The respective obligations of the Fund and the Adviser and the several obligations of the Underwriters hereunder are subject to the condition that the Registration

 

16

 

Statement shall have become effective not later than 2:00 P.M. (New York City time) on the date hereof.

 

The several obligations of the Underwriters are subject to the following further conditions:

 

(a)                     Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, in the case of the Fund, there shall not have occurred any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), business prospects, earnings, business or properties of the Fund from that set forth in the Time of Sale Prospectus and, in the case of the Adviser, there shall not have occurred any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), business prospects, earnings, business, properties, management or personnel of the Adviser, in each case, that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus.

 

(b)                    The Underwriters shall have received on the Closing Date certificates, dated the Closing Date, of an executive officer of each of the Fund and the Adviser, to the effect (i) that no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are, as of the Closing Date, pending before or threatened by the Commission, (ii) that the representations and warranties of the Fund and the Adviser contained in this Agreement are true and correct as of the Closing Date, (iii) that each of the Fund and the Adviser has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date and (iv) as set forth in paragraph (a) above, with respect to the Fund or the Adviser, as applicable.

 

Each officer signing and delivering such a certificate may rely upon the best of his or her knowledge as to proceedings threatened.

 

(c)                     Each of the Adviser and the Fund shall have performed all of their respective obligations to be performed hereunder on or prior to the Closing Date.

 

(d)                    The Underwriters shall have received on the Closing Date an opinion of Simpson Thacher & Bartlett LLP, special counsel for the Fund, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Exhibit A hereto.

 

(e)                     The Underwriters shall have received on the Closing Date an opinion of Richards, Layton & Finger, P.A., special Delaware counsel

 

17

 

for the Fund, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Exhibit B hereto.

 

(f)                       The Underwriters shall have received on the Closing Date an opinion of Simpson Thacher & Bartlett LLP, special counsel for the Adviser, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Exhibit C hereto.

 

(g)                    The Underwriters shall have received on the Closing Date the favorable opinion of Davis Polk & Wardwell LLP, counsel for the Underwriters, dated the Closing Date, and covering such matters as the Underwriters shall reasonably request.

 

The opinion of Simpson Thacher & Bartlett LLP, special counsel for the Fund, the opinion of Richards, Layton & Finger, P.A., special Delaware counsel for the Fund, and the opinion of opinion of Simpson Thacher & Bartlett LLP, special counsel for the Adviser, described in Sections 6(d), 6(e) and 6(f) above, respectively, shall be rendered to the Underwriters at the request of the Fund and shall so state therein.

 

(h)                    The Underwriters shall have received on the Closing Date a certificate from a duly authorized officer of the Custodian, certifying that the Custodian Agreement is in full force and effect and is a valid and binding agreement of the Custodian.

 

(i)                        The Underwriters shall have received on the Closing Date a certificate from a duly authorized officer of the Administrator certifying that the Administration Agreement is in full force and effect and is a valid and binding agreement of the Administrator.

 

(j)                        The Underwriters shall have received on the Closing Date a certificate from a duly authorized officer of the Distributor certifying that the Distribution Agreement is in full force and effect and is a valid and binding agreement of the Distributor.

 

(k)                     The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from Deloitte & Touche LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Time of Sale Prospectus, provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.

 

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(l)                        All filings, applications and proceedings taken by the Fund and the Adviser in connection with the organization and registration of the Fund and the Shares under the Acts and the applicable Rules and Regulations shall be satisfactory in form and substance to you and counsel for the Underwriters.

 

(m)                  No action, suit, proceeding, inquiry or investigation shall have been instituted or, to the knowledge of the Fund or the Adviser, threatened by the Commission which would adversely affect the Fund’s standing as a registered investment company under the Investment Company Act or the standing of the Adviser as a registered investment adviser under the Advisers Act.

 

(n)                    The Shares shall have been duly authorized for listing on the New York Stock Exchange, subject only to official notice of issuance thereof.

 

The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Fund and the Adviser, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such Additional Shares, and officers’ certificates and opinions of Simpson Thacher & Bartlett LLP, Richards, Layton & Finger, P.A. and Davis Polk & Wardwell LLP to the effect set forth above, except that such certificates and opinions shall be dated as of the applicable Option Closing Date and statements and opinions above contemplated to be given as of the Closing Date shall instead be made and given as of such Option Closing Date.

 

7.                              Covenants of the Fund and the Adviser .  In further consideration of the agreements of the Underwriters herein contained, the Fund and the Adviser, jointly and severally, covenant and agree with each Underwriter as follows:

 

(a)                     To notify you immediately, and confirm such notice in writing, (i) of the institution of any proceedings pursuant to Section 8(e) of the Investment Company Act and (ii) of the happening of any event during the period mentioned in Section 7(h) below which in the judgment of the Fund makes any statement in the Notification, the Registration Statement the Time of Sale Prospectus, any Omitting Prospectus or the Prospectus untrue in any material respect or which requires the making of any change in or addition to the Notification, the Registration Statement, the Time of Sale Prospectus, any Omitting Prospectus or the Prospectus in order to make the statements therein not misleading in any material respect.  If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement or an order pursuant to Section 8(e) of the Investment Company Act, the Fund will make every reasonable

 

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effort to obtain the withdrawal of such order at the earliest possible moment.

 

(b)       To furnish to you, without charge, three signed copies of each of the Notification and the Registration Statement (including exhibits thereto) and for delivery to each other Underwriter a conformed copy of each of the Notification and the Registration Statement (without exhibits thereto) and to furnish to you in New York City, without charge, prior to 10:00 A.M. (New York City time) on the business day next succeeding the date of this Agreement and during the period mentioned in Section 7(d) below, as many copies of the Time of Sale Prospectus, Prospectus and any supplements and amendments thereto or to the Registration Statement as you may reasonably request.

 

(c)        Before amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object, and to file with the Commission within the applicable period specified in Rule 497 of the Rules and Regulations any prospectus required to be filed pursuant to such Rule.

 

(d)       To furnish to you a copy of each proposed Omitting Prospectus to be prepared by or on behalf of, used by, or referred to by the Fund and not to use or refer to any proposed Omitting Prospectus to which you reasonably object.

 

(e)        If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus materially conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer materially conflict with the Registration Statement, or so that the Time of Sale

 

20

 

Prospectus, as amended or supplemented, will comply with applicable law.

 

(f)        The Fund will use the net proceeds received by it from the sale of the Shares in the manner specified in the Time of Sale Prospectus under the caption “Use of Proceeds.”

 

(g)       The Fund and the Adviser will not take any action designed to cause or result in the manipulation of the price of any security of the Fund to facilitate the sale of Shares in violation of the Acts or the Securities Act and the applicable Rules and Regulations, or the securities or Blue Sky laws of the various states and foreign jurisdictions in connection with the offer and sale of Shares.

 

(h)       If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Fund) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law.

 

(i)         To use its reasonable best efforts to comply with the requirements of Subchapter M of the Code to qualify as a regulated investment company under the Code and to maintain such qualification as a regulated investment company.

 

(j)         To use its reasonable best efforts to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request; provided, however , that the Fund shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

21

 

(k)        To make generally available to the Fund’s security holders and to you as soon as practicable an earning statement covering a period of at least twelve months beginning with the first fiscal quarter of the Fund occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the Rules and Regulations, including Rule 158, of the Commission thereunder.

 

(l)         Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of the obligations of the Fund and the Adviser under this Agreement, including: (i) the fees, disbursements and expenses of the Fund’s counsel and the Fund’s accountants in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Notification, the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, and any Omitting Prospectus prepared by or on behalf of, used by, or referred to by the Fund and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 7(j) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky memorandum, (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by FINRA, (v) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the Common Shares and all costs and expenses incident to listing the Shares on the New York Stock Exchange, (vi) the cost of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Fund relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Fund, travel and lodging expenses of the representatives and officers of the Fund and any such consultants, and the

 

22

 

cost of any aircraft chartered in connection with the road show, (ix) the document production charges and expenses associated with printing this Agreement and (x) all other costs and expenses incident to the performance of the obligations of the Fund hereunder for which provision is not otherwise made in this Section.  It is understood, however, that except as provided in this Section, Section 8 entitled “Indemnity and Contribution” and the last paragraph of Section 10 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.

 

(m)       The Fund will not declare or pay any dividend or other distribution on any of the Common Shares unless a holder of such Common Shares that was not a holder of record until the close of business on July [23], 2010 would be entitled to receive the full amount thereof.

 

8.              Indemnity and Contribution.   (a) Each of the Fund and the Adviser, jointly and severally, agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, each agent of any Underwriter and each director, officer or affiliate of any Underwriter within the meaning of Rule 405 of the Rules and Regulations from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim), caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any Omitting Prospectus, any preliminary prospectus (including any statement of additional information incorporated therein by reference), the Time of Sale Prospectus, or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Fund in writing by such Underwriter through you expressly for use therein.

 

(b)       Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless each of the Fund and the Adviser, its directors or trustees (as the case may be), and each officer of the Fund who signs the Registration Statement and each person, if any, who controls the Fund or the Adviser within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Fund and the Adviser to such Underwriter, but only with reference to information relating to such

 

23

 

Underwriter furnished to the Fund in writing by such Underwriter through you expressly for use in the Registration Statement, any preliminary prospectus (including any statement of additional information incorporated therein by reference), the Time of Sale Prospectus, any Omitting Prospectus or Prospectus or any amendments or supplements thereto.

 

(c)        In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the “ indemnified party ”) shall promptly as reasonably practicable notify the person against whom such indemnity may be sought (the “ indemnifying party ”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonably incurred fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, all persons who are agents of any Underwriters or all persons who are directors, officers and affiliates of any Underwriters within the meaning of Rule 405 of the Rules and Regulations, (ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Fund, its trustees, its officers who sign the Registration Statement and each person, if any, who controls the Fund within the meaning of either such Section, and (iii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Adviser, its directors or trustees, as the case may be, and each person, if any, who controls the Adviser within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for the Underwriters and such control persons, agents, directors, officers and affiliates of any Underwriters, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated,

 

24

 

Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Wells Fargo Securities, LLC.  In the case of any such separate firm for the Fund, and such directors, officers and control persons of the Fund, such firm shall be designated in writing by the Fund.  In the case of any such separate firm for the Adviser, and such directors and control persons of the Adviser, such firm shall be designated in writing by the Adviser.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party shall, without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)       To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Fund and the Adviser on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 8(d)(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 8(d)(i)  above but also the relative fault of the Fund and the Adviser on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other

 

25

 

relevant equitable considerations.  The relative benefits received by the Fund and the Adviser on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Fund and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares.  The relative fault of the Fund and the Adviser on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Fund or the Adviser or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The Underwriters’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint.  The Adviser agrees to pay any amounts that are payable by the Fund pursuant to this paragraph to the extent that the Fund fails to make all contributions required to be made by the Fund pursuant to this Section 8.

 

(e)        The Fund, the Adviser and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d).  The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above, 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 Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

 

26

 

(f)        The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Fund and the Adviser contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter, any agent of any Underwriter or any director, officer and affiliate of any Underwriter or by or on behalf of the Adviser, its officers or directors or any person controlling the Adviser or by or on behalf of the Fund, its officers or trustees or any person controlling the Fund and (iii) acceptance of and payment for any of the Shares.

 

9.              Termination .  The Underwriters may terminate this Agreement by notice given by you to the Fund, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Fund shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, currency exchange rates or controls or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus.

 

10.            Effectiveness; Defaulting Underwriters .  This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

 

If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that

 

27

 

any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter.  If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to you and the Fund for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Fund.  In any such case either you or the Fund shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected.  If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default.  Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

 

If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Fund or the Adviser to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Fund or the Adviser shall be unable to perform its obligations under this Agreement, the Fund and the Adviser, jointly and severally, will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.

 

11.            Entire Agreement .  (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between the Fund, the Adviser and the Underwriters with respect to the preparation of any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares.

 

(b)       The Fund and the Adviser acknowledge that in connection with the offering of the Shares:  (a) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the Fund, the

 

28

 

Adviser or any other person, (b) the Underwriters owe the Fund and the Adviser only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (c) the Underwriters may have interests that differ from those of the Fund and the Adviser.  The Fund and the Adviser waive to the full extent permitted by applicable law any claims any of them may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares.

 

12.            Counterparts .  This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

13.            Applicable Law .  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 

14.            Headings .  The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

 

15.            Notices .  All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered, mailed or sent to you in care of Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013, Attention:  General Counsel; Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, New York 10036, Attention: Syndicate Department; UBS Securities LLC, 299 Park Avenue, New York, New York 10171, Attention: Syndicate Department; and Wells Fargo Securities, LLC, 375 Park Avenue, New York, New York 10152, Attention:  Equity Syndicate, if to the Fund, shall be delivered, mailed or sent to 280 Park Avenue, 11th Floor, New York, New York 10017, Attention: Marisa Beeney; if to the Adviser, shall be delivered, mailed or sent to 280 Park Avenue, 11th Floor, New York, New York 10017, Attention Marisa Beeney; with a copy to Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, Attention: Sarah E. Cogan.

 

29

 

	Very truly yours,
	Blackstone / GSO Senior Floating Rate Term Fund
	By:
		Name:
		Title:
	GSO / Blackstone Debt Funds Management LLC
	By:
		Name:
		Title:

 

30

 

Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
UBS Securities LLC
Wells Fargo Securities, LLC
Acting severally on behalf of themselves and the several Underwriters named in Schedule I hereto
	Morgan Stanley & Co. Incorporated
By:
	Name:
	Title:
	Citigroup Global Markets Inc.
By:
	Name:
	Title:
	Merrill Lynch, Pierce, Fenner & Smith Incorporated
By:
	Name:
	Title:

 

31

 

	UBS Securities LLC
By:
	Name:
	Title:
By:
	Name:
	Title:
	Wells Fargo Securities, LLC
By:
	Name:
	Title:

 

32

 

SCHEDULE I

 

Underwriter		Number of Firm Shares To Be Purchased
Morgan Stanley & Co. Incorporated
Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
UBS Securities LLC
Wells Fargo Securities, LLC
Janney Montgomery Scott LLC
Ladenburg Thalmann & Co. Inc.
Maxim Group LLC
RBC Capital Markets Corporation
Stifel, Nicolaus & Company, Incorporated
Wedbush Securities Inc.
BB&T Capital Markets, a division of Scott & Stringfellow, LLC
Crowell, Weedon & Co.
David A. Noyes & Company
Newbridge Securities Corporation
Southwest Securities, Inc.
Wunderlich Securities, Inc.
Total:

 

I-1

 

SCHEDULE II

 

Omitting Prospectuses

 

1.                                        Retail Omitting Prospectus:

 

Blackstone / GSO Senior Floating Rate Term Fund Investor Brochure.

 

2.                                        The following documents labeled “ Advisor Use Only — Not For Distribution to the Public ”:

 

Blackstone / GSO Senior Floating Rate Term Fund Short Article No. 1.

 

Blackstone / GSO Senior Floating Rate Term Fund Short Article No. 2.

 

Blackstone / GSO Senior Floating Rate Term Fund Short Article No. 3.

 

Blackstone / GSO Senior Floating Rate Term Fund Short Article No. 4.

 

Blackstone / GSO Senior Floating Rate Term Fund Long Article.

 

Blackstone / GSO Senior Floating Rate Term Fund email to brokers.

 

3.                                        Press release dated           , 2010.

 

4.                                        Omitting Prospectus forming part of the Time of Sale Disclosure Package, if any:

 

None.

 

 

SCHEDULE III

 

Pricing Information

 

1.                                        Price per Share to the Public: $20.00

 

2.                                        Number of Shares Sold: [   ]

 

III-1

 

EXHIBIT A

 

OPINION OF SIMPSON THACHER & BARTLETT LLP

 

[ TO COME ]

 

III-1

 

EXHIBIT B

 

OPINION OF RICHARDS, LAYTON & FINGER, P.A.

 

[TO COME]

 

III-1

 

EXHIBIT C

 

OPINION OF SIMPSON THACHER & BARTLETT LLP

 

[TO COME]

 

III-1

 

[FORM OF]

 

OPTION EXERCISE NOTICE

 

[   ], 2010

 

Blackstone / GSO Senior Floating Rate Term Fund

280 Park Avenue

11th Floor

New York, New York 10017

 

GSO / Blackstone Debt Funds Management LLC

280 Park Avenue

11th Floor

New York, New York 10017

 

Ladies and Gentlemen:

 

We refer to the Underwriting Agreement dated May [   ], 2010 (the “Underwriting Agreement”) among Blackstone / GSO Senior Floating Rate Term Fund and GSO / Blackstone Debt Funds Management LLC and Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Wells Fargo Securities, LLC as representatives of the several Underwriters listed in Schedule I thereto; capitalized terms being used herein as therein defined.  We hereby exercise an option to purchase [   ] Additional Shares, on the basis of the representations and warranties contained in the Underwriting Agreement, and subject to its terms and conditions.  Such Additional Shares will be purchased on [   ], 2010 (which shall be an Option Closing Date) at the offices of Davis Polk & Wardwell LLP, New York, New York, at 10:00 A.M. (New York City time).  [This option exercise is without prejudice to the Underwriters’ right under the Underwriting Agreement to exercise one or more options covering some or all of the remaining Additional Shares.]

 

II-1

 

	Very truly yours,
	Morgan Stanley & Co. Incorporated
	Citigroup Global Markets Inc.
	Merrill Lynch, Pierce, Fenner & Smith Incorporated
	UBS Securities LLC
	Wells Fargo Securities, LLC
			as representatives of the several underwriters listed in Schedule I to the Underwriting Agreement
		Morgan Stanley & Co. Incorporated
	By:
		Name:
		Title:
		Citigroup Global Markets Inc.
	By:
		Name:
		Title:
		Merrill Lynch, Pierce, Fenner & Smith Incorporated
	By:
		Name:
		Title:

 

 

		UBS Securities LLC
	By:
		Name:
		Title:
	By:
		Name:
		Title:
		Wells Fargo Securities, LLC
	By:
		Name:
		Title:

 

cc: Sarah E. Cogan, Esq., Simpson Thacher & Bartlett LLP

 

Exhibit 99(k)(2)

 

FORM OF MARKETING, ADMINISTRATION, BOOKKEEPING AND

PRICING SERVICES AGREEMENT

 

THIS AGREEMENT is made as of May          , 2010, between Blackstone / GSO Senior Floating Rate Term Fund (the “Fund”), a Delaware statutory trust, and ALPS Fund Services, Inc., a Colorado corporation (“ALPS”).

 

WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as a closed-end, non-diversified management investment company.

 

WHEREAS, GSO / Blackstone Debt Funds Management LLC (the “Adviser”) is the Fund’s investment adviser and is responsible for overall investment management services to the Fund.

 

WHEREAS, ALPS provides certain marketing, administrative, bookkeeping and pricing services to investment companies; and

 

WHEREAS, the Fund and Advisor desire to appoint ALPS to perform certain marketing, administrative, bookkeeping and pricing services for the Fund, and ALPS has indicated its willingness to so act, subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter contained, the parties hereto agree as follows:

 

1.                            ALPS Appointment and Duties.

 

(a)                       The Fund and Advisor hereby appoint ALPS to provide administrative, bookkeeping and pricing services as are set forth in Appendix A , as amended from time to time, upon the terms and conditions hereinafter set forth. ALPS hereby accepts such appointment and agrees to furnish such specified services. ALPS shall for all purposes be deemed to be an independent contractor and shall, except as otherwise expressly authorized in this Agreement, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund.

 

(b)                      ALPS may employ or associate itself with a person or persons or organizations as ALPS believes to be desirable in the performance of its duties hereunder; provided that, in such event, the compensation of such person or persons or organizations shall be paid by and be the sole responsibility of ALPS and the Fund shall not bear any cost or obligation with respect thereto; and provided further that ALPS shall not be relieved of any of its obligations under this Agreement in such event and shall be responsible for all acts of any such person or persons or organizations taken in furtherance of this Agreement to the same extent it would be for its own acts.

 

2.                            ALPS Compensation; Expenses .

 

(a)                       In consideration for the services to be performed hereunder by ALPS, the Fund or Advisor shall pay ALPS the fees listed in Appendix B hereto.  Notwithstanding anything to the contrary in this Agreement, fees billed for the services to be performed by ALPS under this Agreement are based on information provided by the

 

 

Fund and such fees are subject to renegotiation between the parties to the extent such information is determined to be materially different from what the Fund or Advisor originally provided to ALPS.

 

(b)                      ALPS will bear all expenses in connection with the performance of its services under this Agreement, except as otherwise provided herein. ALPS will NOT bear any of the costs of Fund personnel. Other Fund expenses incurred shall be borne by the Fund including, but not limited to, initial organization and offering expenses; litigation expenses; taxes; costs of preferred shares; expenses of conducting repurchase offers for the purpose of repurchasing Fund shares; transfer agency and custodial expenses; taxes; interest; Fund trustees’ fees; brokerage fees and commissions; state and federal registration fees; advisory fees; insurance premiums; fidelity bond premiums; Fund and investment advisory related legal expenses; costs of maintenance of Fund existence; printing and delivery of materials in connection with meetings of the Fund trustees; printing and mailing shareholder reports, offering documents, and proxy materials and other communications to shareholders; securities pricing data services; and expenses in connection with electronic filings with the U.S. Securities and Exchange Commission (the “SEC”).

 

3.                            Right to Receive Advice .

 

(a)                       Advice of the Fund .  If ALPS is in doubt as to any action it should or should not take, ALPS shall request directions, advice or instructions from the Fund, Advisor or, as applicable, the Fund’s custodian or other service providers.

 

(b)                      Advice of Counsel .  If ALPS is in doubt as to any question of law pertaining to any action it should or should not take, ALPS may request advice from counsel of its own choosing (who may be counsel for the Fund, or ALPS, at the option of ALPS, at its own cost).

 

(c)                       Conflicting Advice .  In the event of a conflict between directions, advice or instructions ALPS receives from the Fund or any service provider and the advice ALPS receives from counsel, ALPS may with prior written consent of the Fund, which may not be unreasonably withheld, rely upon and follow the advice of counsel.  ALPS will provide the Fund with prior written notice of its intent to follow advice of counsel that is materially inconsistent with directions, advice or instructions from the Fund.  Upon request, ALPS will provide the Fund with a copy of such written advice of counsel.

 

4.                            Standard of Care; Limitation of Liability; Indemnification .

 

(a)                       ALPS shall be obligated to act in good faith and to exercise reasonable care and diligence in the performance of its duties under this Agreement.

 

(b)                      In the absence of willful misfeasance, bad faith, negligence or reckless disregard by ALPS in the performance of its duties, obligations or responsibilities set forth in this Agreement, ALPS and its affiliates, including their respective officers, directors, agents, principals, partners, shareholders (“Indemnified Parties”) and employees, shall not be liable for, and the Fund agrees to indemnify, defend and hold harmless

 

2

 

such Indemnified Parties from, all taxes, charges, expenses, disbursements, assessments, claims, losses, damages, penalties, actions, suits, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws) arising directly or indirectly from the following:

 

(i)                        the inaccuracy of factual information furnished to ALPS by the Fund, Advser or the Fund’s custodian or other service providers;

 

(ii)                     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 for such actions taken pursuant to Section 3(c) above;

 

(iii)                  losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation, acts of God, action or inaction of civil or military authority, war, terrorism, riot, fire, flood, sabotage, labor disputes, elements of nature or non-performance by a third party;

 

(iv)                 ALPS’ reliance on any instruction, direction, notice, instrument or other information that ALPS reasonably believes to be genuine;

 

(v)                    loss of data or service interruptions caused by equipment failure; or

 

(vi)                 any other action or omission to act which ALPS takes in connection with the provision of services to the Fund.

 

(c)                       ALPS shall indemnify and hold harmless the Fund and its respective Indemnified Parties from and against any and all taxes, charges, expenses, disbursements, assessments, claims, losses, damages, penalties, actions, suits, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws) arising directly or indirectly from ALPS’ willful misfeasance, bad faith, negligence or reckless disregard in the performance of its duties, obligations or responsibilities set forth in this Agreement.

 

(d)                      Notwithstanding anything in this Agreement to the contrary, neither party shall be liable under this Agreement to the other party hereto for any punitive, consequential, special or indirect losses or damages.  Any indemnification payable by a party to this Agreement shall be net of insurance maintained by the indemnified party as of the time the claim giving rise to indemnity hereunder is alleged to have arisen to the extent it covers such claim.

 

5.                            Activities of ALPS .  The services of ALPS under this Agreement are not to be deemed exclusive, and ALPS shall be free to render similar services to others. The Fund recognizes that from time to time directors, officers and employees of ALPS may serve as directors, officers and employees of other corporations or businesses (including other investment companies) and that such other corporations and funds may include ALPS as part of their

 

3

 

name and that ALPS or its affiliates may enter into administrative, bookkeeping, pricing agreements or other agreements with such other corporations and funds.

 

6.                            Accounts and Records .  The accounts and records maintained by ALPS shall be the property of the Fund.  Such accounts and records shall be prepared, maintained and preserved as required by the 1940 Act and other applicable securities laws, rules and regulations. Such accounts and records shall be surrendered to the Fund promptly upon receipt of instructions from the Fund in the form in which such accounts and records have been maintained or preserved. The Fund shall have access to such accounts and records at all times during ALPS’ normal business hours. Upon the request of the Fund, copies of any such books and records shall be provided by ALPS to the Fund at the Fund’s expense. ALPS shall assist the Fund, the Fund’s independent auditors, or, upon approval of the Fund, any regulatory body, in any requested review of the Fund’s accounts and records, and reports by ALPS or its independent accountants concerning its accounting system and internal auditing controls will be open to such entities for audit or inspection upon reasonable request.

 

7.                            Confidential and Proprietary Information .  ALPS agrees that it will, on behalf of itself and its officers and employees, treat all transactions contemplated by this Agreement, and all records and information relative to the Adviser, the Fund, and its shareholders and affiliates (past, present and future) and other information germane thereto, as confidential and as proprietary information of the Fund and not to use, sell, transfer or divulge such information or records to any person for any purpose other than performance of its duties hereunder, except after prior notification to and approval in writing from the Fund.  It may not be withheld where ALPS may be exposed to civil, regulatory or criminal proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund. ALPS shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of records and information relating to the Fund and its past, present and future shareholders, consumers and customers.

 

8.                            Compliance with Rules and Regulations . ALPS shall comply — and to the extent ALPS takes or is required to take action on behalf of the Fund hereunder shall cause the Fund to comply — with all applicable requirements of the 1940 Act and other applicable laws, rules, regulations, orders and code of ethics, as well as all investment restrictions, policies and procedures adopted by the Fund of which ALPS has knowledge, including, but not limited to, those investment restrictions, policies, and procedures described in the Fund’s registration statement on Form N-2. Except as specifically set forth herein, ALPS assumes no responsibility for such compliance by the Fund under this Agreement.

 

9.                            Representations and Warranties of ALPS .  ALPS represents and warrants to the Fund that:

 

(a)                       It is duly organized and existing as a corporation and in good standing under the laws of the State of Colorado.

 

(b)                      It is empowered under applicable laws and by its Articles of Incorporation and By-laws to enter into and perform this Agreement.

 

4

 

(c)                       All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

 

(d)                      There is no administrative, civil or criminal proceeding pending or threatened that would impair its ability to perform its duties or obligations under this Agreement.

 

(e)                       It has and will continue to have access to the necessary facilities, equipment, including, but not limited to, appropriate disaster recover, and personnel to perform its duties and obligations under this Agreement in accordance with industry standards.

 

10.                      Representations and Warranties of the Fund.   The Fund represents and warrants to ALPS that:

 

(a)                       It is a Delaware statutory trust duly organized and existing and in good standing under the laws of Delaware and is registered with the SEC as a closed-end investment company.

 

(b)                      It is empowered under applicable laws and by its Agreement and Declaration of Trust and By-laws to enter into and perform this Agreement.

 

(c)                       The Board of Trustees has duly authorized it to enter into and perform this Agreement.

 

11.                      Documents .  The Fund has furnished or will furnish, upon request, ALPS with copies of the Fund’s Agreement and Declaration of Trust, advisory agreement, custodian agreement, transfer agency agreement, administration agreement, current prospectus, statement of additional information, periodic Fund reports and all forms relating to any plan, program or service offered by the Fund. The Fund shall furnish, within a reasonable time period, to ALPS a copy of any amendment or supplement to any of the above-mentioned documents. Upon request, the Fund shall furnish promptly to ALPS any additional documents necessary or advisable to perform its functions hereunder. As used in this Agreement the terms “registration statement,” “prospectus” and “statement of additional information” shall mean any registration statement, prospectus and statement of additional information filed by the Fund with the SEC and any amendments and supplements thereto that are filed with the SEC.

 

12.                      Consultation Between the Parties .  ALPS and the Fund shall regularly consult with each other regarding ALPS’ performance of its obligations under this Agreement. In connection therewith, the Fund shall submit to ALPS at a reasonable time in advance of filing with the SEC reasonably final copies of any amended or supplemented registration statement (including exhibits) under the Securities Act of 1933, as amended, and the 1940 Act; provided, however, that nothing contained in this Agreement shall in any way limit the Fund’s right to file at any time such amendments to any registration statement and/or supplements to any prospectus or statement of additional information, of whatever character, as the Fund may deem advisable, such right being in all respects absolute and unconditional.

 

13.                      Liaison with Accountants and Custodian . ALPS shall act as liaison with the Fund’s independent public accountants and custodian, and shall provide account analysis, fiscal

 

5

 

year summaries, and other audit-related schedules or other correspondence, reports, reconciliations, valuations or other documents as the Fund may reasonably request with respect to the services provided to the Fund. ALPS shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information in ALPS’ control is made available to such accountants, custodian, or the Fund for the expression of their opinion, or as required by the Fund.

 

14.                      Business Interruption Plan .  ALPS shall maintain in effect a business interruption plan, and enter into any agreements necessary with appropriate parties making reasonable provisions for emergency use of electronic data processing equipment customary in the industry.  In the event of equipment failures, ALPS shall, at no additional expense to the Fund, take commercially reasonable steps to minimize service interruptions. ALPS shall have no liability with respect to the loss of data or service interruptions caused by equipment failure provided such loss or interruption is not caused by ALPS’ own willful misfeasance, bad faith, negligence or reckless disregard of its duties or obligations under this Agreement.

 

15.                      Duration and Termination of this Agreement .

 

(a)                       Initial Term . This Agreement shall become effective as of the date first written above (the “Start Date”) and shall continue thereafter throughout the period which ends five (5) years after the Start Date (the “Initial Term”). Until the end of the Initial Term, this Agreement may be terminated without penalty only by agreement of the parties upon not less than sixty (60) days’ written notice or for cause pursuant to Section 13(c) hereof.

 

(b)                      Renewal Term . If not sooner terminated, this Agreement shall renew at the end of the Initial Term and shall thereafter continue for successive annual periods until terminated by the Fund or by ALPS, without penalty, upon not less than 90 days’ written notice to the other party.

 

(c)                       Cause .  Notwithstanding anything to the contrary elsewhere in this Agreement, the Fund may terminate this Agreement for cause immediately at any time, without penalty, without default and without the payment of any Default Payment or other liquidated damages. Termination for “cause” hereunder shall mean:

 

(i)                          willful misfeasance, bad faith, negligence or reckless disregard on the part of ALPS in the performance of or with respect to its obligations and duties hereunder;

 

(ii)                       regulatory, administrative, or judicial proceedings against ALPS which result in a determination that, in rendering its services hereunder, ALPS has violated — or has caused the Fund to violate — any applicable law, rule, regulation, order or code of ethics, or any investment restriction, policy or procedure adopted by the Fund of which ALPS had knowledge;

 

(iii)                    financial difficulties on the part of ALPS which are evidenced by the authorization or commencement of, or involvement by way of pleading, answer, consent, or acquiescence in, a voluntary or involuntary case under Title 11 of the United States Code, as from time to time in effect, or any applicable law

 

6

 

other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors: or

 

(iv) failure by ALPS to meet its obligations hereunder or a breach of ALPS’ representations and warranties hereunder if such failure or breach goes uncured for a period of 30 days after written notice to ALPS of such failure or breach.

 

(d)                      Deliveries Upon Termination . Upon termination of this Agreement, ALPS shall deliver to the Fund or as otherwise directed by the Fund (at the expense of the Fund, unless such termination is for “cause”) all records and other documents made or accumulated in the performance of its duties for the Fund hereunder.

 

(e)                       Fees and Expenses Upon Termination .  S hould either party exercise its right to terminate, all reasonable out-of-pocket expenses or costs associated with the movement of records and material will be borne by the Fund.  Additionally, ALPS reserves the right to charge a reasonable fee for its de-conversion services.

 

16.                      Assignment .  This Agreement shall extend to and shall be binding upon the parties hereto and their respective successors and permitted assigns; provided, however, that this Agreement shall not be assignable by the Fund or Advisor without the prior written consent of ALPS, or by ALPS without the prior written consent of the Fund.

 

17.                      Governing Law .  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York, and the 1940 Act and the rules thereunder.  To the extent that the laws of the State of New York conflict with the 1940 Act or such rules, the latter shall control.

 

18.                      Names .  The obligations of the “Fund” entered into in the name or on behalf thereof by any director, representative or agent thereof are made not individually, but in such capacities, and are not binding upon any of the directors, shareholders, representatives or agents of the Fund personally, but bind only the property of the Fund, and all persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund.

 

19.                      Amendments to this Agreement .  This Agreement may only be amended by the parties in writing.

 

20.                      Notices .  All notices and other communications hereunder shall be in writing, shall be deemed to have been given when received or when sent by telex or facsimile, and shall be given to the following addresses (or such other addresses as to which notice is given):

 

To ALPS:

 

ALPS Fund Services, Inc.

1290 Broadway, Suite 1100

Denver, Colorado  80203

Attn:  General Counsel

Fax:  303.623.7850

 

7

 

To the Fund:

 

Blackstone / GSO Senior Floating Rate Term Fund

c/o GSO / Blackstone Debt Funds Management LLC

280 Park Avenue, 11 th  Floor

New York, NY  10017

Attn: Daniel Smith and Marisa Beeney

Fax:  212.503.6924

 

TO ADVISOR:

 

With copies of any notice to the Fund or Advisor to:

 

Sarah E. Cogan

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Fax:  212.455.2502

 

21.                      Counterparts .  This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

22.                      Entire Agreement .  This Agreement embodies the entire agreement and understanding among the parties and supersedes all prior agreements and understandings relating to the subject matter hereof; provided, however, that ALPS may embody in one or more separate documents its agreement, if any, with respect to delegated duties and oral instructions.

 

[Remainder of Page Intentionally Left Blank]

 

8

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

BLACKSTONE / GSO SENIOR FLOATING RATE TERM FUND

 

By:
Name:
Title:
ALPS FUND SERVICES, INC.
By:
Name: Jeremy O. May
Title: President

 

9

 

APPENDIX A

 

SERVICES

 

Fund Administration

 

·                   Prepare annual and semi-annual financial statements

·                   Coordinate layout and printing of annual and semi-annual reports

·                   Prepare and file Forms N-SAR, N-CSR and N-Q

·                   Assist with filing of Form N-PX (ALPS assumes no responsibility for compiling or maintaining the proxy voting record of the Fund, if any, but will work with the adviser and custodian in preparing the record  in the proper format for filing on Form N-PX, and assist with filing the Form on EDGAR, if required.)

·                   Host annual audits and SEC exams

·                   Perform monthly prospectus compliance and SEC diversification tests

·                   Calculate monthly SEC standardized total return performance figures

·                   Prepare required reports for quarterly Board meetings

·                   Monitor expense ratios

·                   Maintain budget vs. actual expenses

·                   Manage fund invoice approval and bill payment process

·                   Assist with placement of Fidelity Bond and T&O insurance

·                   Coordinate reporting to outside agencies including Morningstar, etc.

·                   Coordinate with custodian and other outside service providers of the Fund

 

Fund Accounting

 

·                   Calculate daily NAVs

·                   Transmit daily NAVs to NASDAQ, Transfer Agent and other third parties

·                   Compute yields, expense ratios, portfolio turnover rates, etc.

·                   Calculate income dividend rates

·                   Reconcile cash and investment balances with the custodian

·                   Support preparation of financial statements

·                   Prepare required Fund Accounting records in accordance with the 1940 Act

 

Legal

 

·                   Provide legal review of SEC financial filings

·                   Coordinate EDGARization and filing of documents

·                   Prepare, compile and mail board materials

·                   Attend board meetings and prepare minutes

·                   Review legal contracts

·                   Oversee Fund’s Code of Ethics reporting

·                   Conduct the Annual Meeting and issue proxies therefore, if required by exchange listing requirements or state law.(1)

 

·       (1)   The parties specifically agree that the services provided by ALPS are limited to routine items normally contained in the annual meeting proxy statement for closed-end investment companies, e.g. election of directors and approval of the Fund’s public auditing firm.  The Fund will be subject to additional charges for preparation of proxy materials that contain “special” or non-routine items to be voted on at an annual meeting or preparation of proxy materials associated with any special meeting.  ALPS, at its sole discretion, will determine what constitutes a “special” or non-routine item to be contained in any annual meeting proxy materials.  The parties further agree that the Fund is responsible for the costs of tabulating the results of any shareholder meeting, and the costs of engaging a proxy solicitor for any shareholder meeting.

 

10

 

Tax

 

·                   Calculate dividend and capital gain distribution rates, including distributions necessary to avoid excise tax*

·                   Calculate tax disclosure information (ROCSOP) for the audited financial statements

·                   Prepare and file federal and state income and excise tax returns (and appropriate extensions)*

·                   Monitor on a quarterly basis the Fund’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended

·                   Calculate and monitor applicable book-to-tax differences and assist in identifying securities that give rise to book-to-tax differences**

·                   Calculate year-end tax characterization for distributions paid during the calendar year

 

*Fund’s independent auditors provide review & sign-off on excise distributions and income and excise tax returns.  ALPS shall not analyze or investigate information or returns for foreign tax filings.  State income or franchise tax return preparation is limited to the initial state of nexus and does not include additional state filing requirements that may be triggered by underlying investments of the Fund.

 

**Security classifications to be identified include but are not limited to passive foreign investment company, real estate investment trust, master limited partnership, contingent debt obligations, trust preferred, grantor trust, and stapled security.  The ultimate determination of the classification of securities will be the responsibility of Fund management.

 

Creative Services

 

·                   Financial regulatory reports

·                   Proxy statements (creation and printing)

·                   Marketing pieces (including fact sheets, slicks and brochures)

·                   Collateral

·                   Presentations

·                   Print Vendor Management: bids, vendor communications and report mailings

·                   Creation of web architecture, design, layout and maintenance

 

Marketing

 

·                   Secondary market support with wholesaling team

·                   800 phone line with registered reps

 

11

 

APPENDIX B

 

FEES

 

Fees paid to ALPS shall be calculated and accrued daily and payable monthly by the Fund or Advisor at a rate equal to the greater of 15 basis points annually on Managed Assets of the Fund (as that term is defined in the Investment Advisory Agreement between Fund and Advisor) or, a minimum annual fee of $350,000, plus out-of-pocket expenses.  Out-of-pocket expenses include, but are not limited to, third party security pricing and data fees, Bloomberg fees, Gainskeeper fees, SAS 70 control review report, travel expenses to board meetings and on-sight reviews, proxy service fees, printing and mailing fees, fulfillment costs, customized programming/enhancements, calls, webinars, roadshow expenses, and other out-of-pocket expenses incurred by ALPS in connection with the performance of its duties under this Agreement. ALPS agrees to pay up to $20,000 per year for out- of- pocket expenses associated with Marketing services, such as calls, webinars, and other communication services and fees in excess of $20,000 per year will be billed to the Fund or Advisor as out-of-pocket expenses.

 

LATE CHARGES:   All invoices are due and payable within 30 days upon receipt.

 

12

Exhibit (k)(3)

 

FORM OF DISTRIBUTION ASSISTANCE AGREEMENT

 

This Distribution Assistance Agreement, dated as of           , 2010, is entered into by and among, GSO / Blackstone Debt Funds Management LLC (“GSO”), a Delaware limited liability company, Blackstone / GSO Senior Floating Rate Term Fund (the “Fund”), a Delaware statutory trust, and ALPS Distributors, Inc., a corporation organized under the laws of the state of Colorado (“ALPS”).

 

In consideration of ALPS’ provision of distribution assistance services to the Fund in connection with the offering of common shares of beneficial interest (exclusive of any exercise of the overallotment) of the Fund pursuant to the Fund’s prospectus dated May          , 2010 (the “Offering”), which services include assistance with coordinating the road show and designing and coordinating the printing of marketing materials, GSO will cause the Fund to pay ALPS up to 0.10% of the total public offering price (exclusive of any exercise of the overallotment) amount of the Offering.

 

First, the Fund will pay up to 0.10% of the amount of the Offering, provided that, the Fund has not otherwise paid expenses relating to the Offering (exclusive of the sales load, but inclusive of the reimbursement of underwriter expenses) (the “Fee”) up to the reimbursement cap of $0.04 per common share of the Fund and, further, provided that, in no case shall such amount paid by the Fund exceed $                    .   Any such amount paid by the Fund to ALPS shall also include reimbursements to ALPS for its reasonable and documented out of pocket expense related to the road show.

 

If the amount described in the above paragraph paid by the Fund to ALPS is less than 0.10% of the Offering, GSO shall pay ALPS such difference in amount between the amount paid to ALPS by the Fund and 0.10% of the Offering.

 

The Fund, GSO and ALPS acknowledge and agree that the compensation set forth above shall be the only compensation ALPS will receive from the Fund for its distribution assistance in connection with the Offering.

 

ALPS acknowledges and agrees it has the full power and authority to enter into this Agreement; the execution and delivery of, and the performance by ALPS of its obligations under this Agreement have been duly and validly authorized; and this Agreement has been duly executed and delivered by ALPS and constitutes a valid and legally binding agreement of the ALPS, enforceable against the Fund in accordance with their terms, except as rights to indemnity and contribution may be limited by federal or state securities laws and subject to the qualification that the enforceability of the Fund’s obligations hereunder and there under may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws relating to or affecting creditors’ rights generally and by general equitable principles.

 

ALPS acknowledges and agrees that all actions taken by it pursuant to this Agreement are in compliance with all applicable law.

 

ALPS shall use its best judgment and efforts in rendering the services described in this Agreement.  ALPS shall not be liable to the Fund for any action or inaction of ALPS relating to any event whatsoever in the absence of bad faith, reckless disregard, negligence or willful misfeasance in the performance of ALPS’ duties or obligations under this Agreement.  Further, ALPS shall not be liable to the Fund for any action taken or failure to act in good faith reliance

 

 

upon: (i) the advice and opinion of Fund counsel; and (ii) any certified copy of any resolution of the Board of Trustees of the Fund; and ALPS shall not be under any duty or obligation to inquire into the validity or invalidity or authority or lack thereof of any statement, oral or written instruction, resolution, signature, request, letter or transmittal, certificate, opinion of counsel, instrument, report, notice, consent, order, or any other document or instrument which ALPS reasonably believes in good faith to be genuine.

 

The Fund agrees to indemnify and hold harmless ALPS, its employees, agents, directors, officers and managers and any person who controls ALPS within the meaning of section 15 of the Securities Act or Section 20 of the Exchange Act (“ALPS Indemnitees”), against and from any and all claims, demands, actions, suites, judgments, administrative proceedings or investigations, liabilities, losses, damages, costs, charges, reasonable counsel fees and other expenses of every nature and character arising out of or in any way related to ALPS’ actions taken or failure to act with respect to the Fund in connection with the performance of any duties or obligations under this Agreement (a “ALPS Claim”); provided, however, that nothing contained herein shall entitle an ALPS Indemnitee to indemnification with respect to any ALPS Claim arising from ALPS’ own bad faith, reckless disregard, negligence or willful malfeasance, or breach of this Agreement.

 

ALPS agrees to indemnify and hold harmless the Fund, its employees, agents, directors, officers and managers, against and from any and all claims, demands, actions, suits, judgments, administrative proceedings and investigations, liabilities, losses, damages, costs, charges, reasonable counsel fees and other expenses of every nature and character arising out of or in any way related to any breach of this Agreement by ALPS.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

	Blackstone / GSO Senior Floating Rate Term Fund
	Name:
	Title:
	ALPS Distributors, Inc.
	Name:
	Title:
	GSO / Blackstone Debt Funds Management LLC
	Name:
	Title:

 

Exhibit 99(r) (1)

 

CODE OF ETHICS

 

(EFFECTIVE: APRIL 26, 2010)

 

I.               INTRODUCTION

 

Conducting ourselves in an ethical manner is a cornerstone of our business model. We greatly value our reputation for honesty and integrity and believe that this reputation is one of our competitive strengths.  Each of us should strive every day to ensure that our ethical values are conveyed through our contacts with colleagues, clients, business partners and competitors.  We will ultimately be judged not only by our results, but by the path we took to achieve them.  All of us have a responsibility to each other to act in a manner that demonstrates our commitment to the highest standards of integrity.

 

This Code of Ethics has been adopted to help us ensure that our high ethical standards are maintained and to preclude circumstances which may lead to or give the appearance of conflicts of interest, insider trading or unethical business conduct.  Adherence to the Code of Ethics, both in letter and in spirit, is fundamental and an absolute condition of employment.

 

The Code of Ethics can only provide guidelines.  It cannot address every circumstance in which we may be called upon to observe and practice sound business ethics.  Therefore, the board of trustees (the “Board of Trustees”) of Blackstone / GSO Senior Floating Rate Term Fund (the “Fund”) and every employee (together with the Board of Trustees, the “Employees”) of the Fund is expected to conduct himself or herself with good judgment, question and report inappropriate business conduct or unethical behavior by others, and bring questions or concerns to the attention of the Chief Compliance Officer.

 

A.             Availability of Code of Ethics, Certification

 

The Chief Compliance Officer shall provide a copy of this Code of Ethics, and any supplement, amendment or restatement of this Code of Ethics, either in paper or electronically, (i) to all current Employees promptly following its adoption by the Board of Trustees, and (ii) to any new Employees promptly upon the commencement of association with the Fund.  All Employees are required to read this Code of Ethics (as supplemented, amended or restated, if applicable) and to certify of their having received, read and understood these materials.

 

B.             Other Applicable Policies

 

In addition to the Code of Ethics, you may, from time to time, receive (by email or other form of notice) copies of special regulatory or compliance notices or alerts.  Nothing contained in this Code of Ethics should be interpreted as relieving you from the obligation to act in accordance with such alerts or separate policies and procedures.

 

C.             Strict Adherence; Reporting Violations; Sanctions

 

Strict adherence to this Code of Ethics is the responsibility of each Employee.

 

All Employees, and any other persons subject to any provisions of this Code of Ethics must promptly report all violations and apparent violations of this Code of Ethics and the reporting obligations hereunder to the Chief Compliance Officer.

 

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Upon discovering that an Employee has not complied with any requirements of, or has otherwise breached, this Code of Ethics, the Fund may impose such sanctions as they deem appropriate, including, among other things, disgorgement of profits, censure, suspension and/or termination of employment.  All material violations of requirements of this Code of Ethics and any sanctions imposed shall be promptly reported to senior management of the Fund, which includes the Chief Executive Officer, President, Chief Financial Officer, Treasurer, Executive Vice President, Chief Legal Officer, Chief Compliance Officer, Secretary and Assistant Secretary.

 

II.             STATEMENT OF STANDARDS OF BUSINESS CONDUCT

 

A.             Fair Dealing

 

Employees should not take unfair advantage of any other party through fraud, manipulation, concealment, abuse of privileged information, misrepresentation or omission of material facts, or any other unfair practices. Every Employee should endeavor to deal fairly with Fund’s clients, officers, Employees, suppliers, and competitors.

 

B.             General Fiduciary Duty

 

1.              The Fund owes its shareholders an affirmative duty of utmost good faith, undivided loyalty, full and fair disclosure of all material facts, and an affirmative obligation to employ reasonable care to avoid misleading shareholders.  It is the duty of all Employees to:

 

·                   Place the interests of shareholders first at all times;

 

·                   Conduct personal trading in a manner to avoid any potential or actual conflicts of interest or abuse of their fiduciary position of trust, loyalty and interest;

 

·                   Not take, directly or indirectly, inappropriate advantage of their positions or abuse their fiduciary position of trust, loyalty and interest; and

 

·                   Comply with all applicable federal securities laws.

 

2.              No Employee shall utilize information concerning prospective or actual portfolio holdings or transactions in any manner which might prove detrimental to the interests of a client.

 

3.              No Employee shall use his or her position for his or her personal benefit or attempt to cause a client to purchase, sell or hold a particular security when that action may reasonably be expected to create a personal benefit for such Employee.

 

4.              This Code of Ethics applies to transactions in securities for personal accounts of Employees and any other accounts in which they have any beneficial ownership or control.  It imposes certain investment restrictions and prohibitions and requires the reports identified herein.  If Employees become aware of material non-public information, some personnel may find themselves “frozen” in a position – e.g., unable to buy or sell.  Any losses in personal accounts resulting from the implementation

 

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of any portion of this Code of Ethics will be borne by such Employee holding such account and will not be borne by the Fund.

 

C.             Conflicts of Interest

 

While affirming its confidence in the integrity and good faith of all Employees, the Fund recognizes that certain Employees have or may have knowledge of present or future portfolio transactions and, in certain instances, the power to influence portfolio transactions made by the Fund.  Furthermore, if such individuals engage in personal securities transactions, these individuals could be in a position where their personal interests may conflict with the interests of the Fund or its shareholders.  Accordingly, this Code of Ethics is designed to prevent conduct that could create an actual or potential conflict of interest with the Fund or its shareholders.

 

You should avoid actual or apparent conflicts of interest – that is, any personal interest outside of the Fund which could be placed ahead of your obligations to the Fund and its shareholders.  Conflicts may exist even when no wrong is committed.  The opportunity to act improperly may be enough to create the appearance of a conflict.

 

Some examples of a potential conflict of interest include:

 

·                   owning a material financial interest in any Fund competitor or an entity that currently does business or is seeking to do business with the Fund’s investment adviser, GSO / Blackstone Debt Funds Management (the “Adviser”);

·                   performing services for, being employed by, serving on the board of directors, or serving as an officer of any such entity;

·                   investing in such a way that could compromise one’s ability to perform his or her duties to the Fund; or

·                   having an immediate family member who engages in any of the activities identified in this code.

 

The Fund recognizes and respects an Employee’s right of privacy concerning personal affairs, but requires full and timely disclosure of any situation which could result in a conflict of interest or even the appearance of a conflict.  Whether or not a conflict exists will be determined by the Chief Compliance Officer, not by the Employee involved.

 

To reinforce our commitment to the avoidance of potential conflicts of interest, the following rules have been adopted:

 

1.              You may not act on behalf of the Fund in connection with any transaction in which you have a personal interest.  You are expected to bring such personal interests to the attention of the Chief Compliance Officer, even when you may have already described the possibility of a conflict of interest if such disclosure was not in the context of a specific transaction.

 

2.              You may not, without prior approval, have a substantial interest in any outside business which, to your knowledge, is involved currently in a business transaction with the Adviser or is held by the Fund in its portfolio, or is engaged in businesses similar to any business engaged in by the Fund.  A substantial interest includes any investment in the outside business involving an amount greater than 10

 

3

 

percent of your gross assets, or $10,000, if that amount is larger, or involving an ownership interest greater than 2 percent of the entity’s outstanding equity interests.

 

3.              You may not, without prior approval of the Chief Compliance Officer, engage in any transaction involving the purchase of securities offered by the Fund, except on the same terms and conditions as they are offered to the public.

 

4.              In addition to the foregoing general principles, the following specific business activity rules shall apply to all Employees:

 

(a)                       Retention of Suppliers .  The choice of our suppliers must be based on quality, reliability, price, service and technical advantages.

 

(b)                      Gifts .  Employees and their immediate families should not solicit, accept, retain or provide any gifts or favors which might influence decisions you or the recipient must make in investment decision or business transaction involving the Fund or which others might reasonably believe could influence those decisions.  Even a nominal gift should not be accepted if, to a reasonable observer, it might appear that the gift would influence your business decisions.

 

Modest gifts and favors, which would not be regarded by others as improper, may be accepted or given on an occasional basis.  Examples of such gifts are those received as normal business courtesies (e.g., a bottle of wine or tickets to a sporting game); non-cash gifts of nominal value (such as received at holiday time); and gifts received because of kinship, marriage or social relationships entirely beyond and apart from an organization in which membership or an official position is held.

 

In addition, entertainment (meaning generally that the person paying for the expense is present) may be accepted on an occasional basis if it would not reasonably be regarded by others as improper.  Examples of entertainment include an occasional meal or greens fees for a golf outing.  Generally, (a) no gift may be accepted or provided that exceeds $100 in value and (b) no entertainment may be accepted if you reasonably believe the cost will exceed $400 without prior approval from the Chief Compliance Officer.

 

If you have any questions regarding whether a gift or entertainment may be accepted or retained, you should contact the Chief Compliance Officer.

 

(c)                       Improper Payments – Kickbacks .  In the conduct of the Fund’s business, no bribes, kickbacks or similar remuneration or consideration of any kind are to be given or offered to any individual or organization or to any intermediaries such as agents, attorneys or other consultants, for the purpose of influencing such individual or organization in obtaining or retaining business for, or directing business to, the Fund.

 

(d)                      Books, Records and Accounts .   The integrity of the accounting records of the Fund is essential.  All receipts and expenditures, including personal expense statements, must be supported by documents that accurately and properly describe such expenses. 

 

4

 

Staff members responsible for approving expenditures or for keeping books, records and accounts for the Fund are required to approve and record all expenditures and other entries based upon proper supporting documents so that the accounting records of the Fund are maintained in reasonable detail and reflect accurately and fairly all transactions of the Fund, including the disposition of its assets and liabilities.  The falsification of any book, record or account of the Fund and the submission of any false personal expense statement, claim for reimbursement of a non-business personal expense, or false claim for an employee benefit plan payment are prohibited.

 

D.             Protection and Proper Use of Fund Property and Assets

 

All Employees should protect and safeguard Fund’s property and assets from harm. Theft, misappropriation or intentional destruction of the Fund’s properties and assets is in direct violation of our obligations to our Employees and shareholders. Fund property and assets should only be used for approved purposes.

 

III.            TREATMENT OF CONFIDENTIAL INFORMATION

 

As a result of your employment with the Fund, you will have access to information that is not generally known to the public or to our industry (“ confidential information ”).  Employees of the Fund must not disclose any confidential information entrusted to them by the Fund, the Adviser or any other business counterparty of the Fund, to any third party, except when disclosure is required by laws, regulations or legal proceedings; or when such disclosure is authorized by the Chief Compliance Officer.  Further, Employees should only use confidential information to further the Fund’s business.

 

Confidential information may include, but is not limited to, information relating to proposed, ongoing or completed transactions of the Fund, information regarding companies in the Fund’s portfolio, credit files, Adviser portfolio assessments or recommendations, trade secrets, marketing plans, (including plans for trademarks, service marks and copyrighted materials), confidential financial information of the Fund and business plans.

 

Whenever feasible, Employees should consult with the Chief Compliance Officer if they believe they have a legal obligation to disclose confidential information.

 

Upon the termination of employment, or whenever the Fund or the Adviser shall request, you shall deliver to the Fund all confidential information in your possession or control, including all copies, or other reproductions, of the information.  The Fund is entitled to obtain injunctive relief to prevent threatened and/or actual violations of your agreement not to disclose confidential information.

 

III.            Password Protection of Copyrighted Material

 

Employees should not make use of any passwords to a subscription account other than accounts for which they are the subscriber.  In addition, Employees should not share passwords to any accounts with anyone inside or outside the Fund.  This password sharing may violate intellectual property laws and, if engaged, could subject the Fund or the Adviser to significant economic damages.

 

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IV.            COMPLIANCE WITH FEDERAL SECURITIES LAWS

 

The Fund’s activities must always be in full compliance all applicable laws and regulations.  It is the Fund’s policy to be in strict compliance with the federal securities laws as well as all other laws and regulations that apply to our business.  For purposes of this Code of Ethics, the federal securities laws includes the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 and Title V of the Gramm-Leach-Bliley Act and any rules adopted by the SEC under any of the foregoing statutes.

 

We recognize that some laws and regulations may be ambiguous and difficult to interpret.  A good faith effort to follow the spirit and intent of all laws is required by all Employees.  To ensure compliance, the Fund intends to educate its Employees on laws related to its activities which may include periodically issuing bulletins, manuals and memoranda.  Employees are expected to read all such materials and be familiar with their contents.

 

V.             INSIDER TRADING

 

Pursuant to Rule 17j-1 of the 1940 Act, the purpose of the Code is to establish standards and procedures that are reasonably designed for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of a Fund may abuse their fiduciary duties to the Fund and otherwise to deal with the types of conflict of interest situations to which Rule 17j-1 is addressed.

 

VI.            PERSONAL TRADING POLICY

 

A.             Legal Requirements

 

Pursuant to Rule 17j-1(b) of the 1940 Act, it is unlawful for any Access Person to:

 

·                   employ any device, scheme or artifice to defraud the Fund;

 

·                   make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they were made, not misleading;

 

·                   engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon the Fund; or

 

·                   engage in any manipulative practice with respect to the Fund,

 

in connection with the purchase or sale (directly or indirectly) by such Access Person of a Security held or to be acquired by the Fund.

 

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B.             Defined Terms

 

For purposes of this Personal Trading Policy, the following terms have the meanings indicated:

 

1.              “ Access Person ” means any trustee, officer, general partner of the Fund or of the Adviser (or of any company in a control relationship to the Fund or the Adviser) who, in connection with his/her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Reportable Securities by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales.

 

2.              “ Automatic Investment Plan ” means a program, including a dividend reinvestment plan, in which regular periodic purchases or withdrawals are made automatically in or from an Investment Account in accordance with a predetermined schedule and allocation.

 

3.              “ Beneficial Ownership ” means “beneficial ownership” as interpreted under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

 

An Access Person generally has Beneficial Ownership of Securities if the Access Person (directly or indirectly), through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the Securities.  The term “pecuniary interest” generally means the opportunity (directly or indirectly) to profit or share in any profit from a transaction in the Securities.  The following are examples of an “indirect pecuniary interest”:

 

·                   Securities held by members of the person’s immediate family sharing the same household (the term “immediate family” includes any child, grandchild, parent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, as well as adoptive and step relationships);

 

·                   A general partner’s proportionate interest in the portfolio securities held by a general or limited partnership;

 

·                   An interest in certain trusts; and

 

·                   A right to acquire equity Securities through the exercise or conversion of any derivative Security, whether or not presently exercisable.

 

A person who is a shareholder of a corporation or similar entity is not deemed to have a pecuniary interest in portfolio Securities held by the corporation or the entity and does not have or share investment control over the corporation’s or the entity’s portfolio.  The term “control” means the power to exercise a controlling influence over management or policies, unless the power is solely the result of an official position with the company.

 

4.              “ Initial Public Offering ” or “ IPO ” means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

5.              “ Investment Account ” means any brokerage, investment advisory, banking or other account through which an Access Person has or may acquire Beneficial Ownership of Securities.

 

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6.                                        “ Limited Offering ” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(6) thereof, or pursuant to Rules 504, 505 or 506 of Regulation D under the Securities Act of 1933.

 

7.                                        “ Purchase ” or “ Sale ” of a Security includes the writing of an option to purchase or sell the Security.

 

8.                                        “ Reportable Security ” means any security other than:

 

(a)                                   Direct obligations of the Government of the United States;

 

(b)                                  Banker acceptances, bank certificates of deposit, commercial paper and high quality short-term debt investments, including repurchase agreements;

 

(c)                                   Shares issued by registered money market funds;

 

(d)                                  Shares by registered open-end investment companies; and

 

(e)                                   Shares issued by unit investment trusts that are invested exclusively in one or more registered open-end investment companies.

 

9.                                        “ Security ” means any security, including (i) a security issued by any collective investment vehicle or fund, (ii) an option to purchase or sell any security, (iii) a security that is convertible or exchangeable for another security, (iv) any other derivative interest relating to a security, and (v) for purposes of this Personal Trading Policy only, loans and loan participations; provided that “Security” shall not include commodities or foreign exchange contracts.

 

C.                                      Pre-Clearance Requirements

 

1.                                        Blackstone Securities .  All purchases and sales of securities of The Blackstone Group L.P. (“Blackstone”) must be cleared through the Adviser’s personal trading request system described below.  Purchases and sales of securities will be subject to blackout periods where no trading will be permitted.  No shorting, options or hedging or derivatives on Blackstone stock will be approved for any reason.  All trading of Blackstone securities must be transacted through an account opened with Merrill Lynch.  Please contact the Chief Compliance Officer for details of opening such accounts.

 

2.                                        Pre-Clearance of Limited Offerings and IPO’s .  Access Persons must pre-clear with the Chief Compliance Officer any transaction involving the direct or indirect acquisition of Beneficial Ownership in a Security in a Limited Offering or as part of an IPO as described in paragraph 3 below.  Consideration of requests for pre-clearance will take into account, among other factors, whether the investment opportunity should be reserved for a client, whether the opportunity is being offered to the Access Persons (directly or indirectly) because of his or her position with or as a reward for past transactions and whether the investment creates, or may in the future create, a conflict of interest.

 

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3.                                        Pre-Clearance of Other Securities Transactions .  Pre-clearance of all Securities Transactions is to be obtained from the Chief Compliance Officer by submitting a request by email and providing the following information: the legal name of the issuer, the ticker symbol, a description of the security (e.g. bonds, equity, etc.) and the size of the transaction.  Access Persons must identify if such security is to be acquired in an initial public offering or private placement).  Pre-clearance will be denied if the proposed transaction involves an asset that is currently in the Fund’s portfolio, is contemplated by or would reasonably be expected to be considered by the Fund for investment, or in the opinion of the Chief Compliance Officer, creates the appearance of a potential conflict with the ongoing activities of the Fund or the Adviser.

 

(a)                                   Pre-clearance will be evidenced by an email from the Chief Compliance Officer or his or her designee.

 

(b)                                  Pre-clearance is applicable to an order for the specific transaction placed in a specified period not to exceed one trading day i.e. — i.e., any day that the New York Stock Exchange is open (although actual execution time may exceed this period) such that the Access Person will generally have at least one full business trading day in which to effect the trade.  For example, if employees’ request is approved before the opening of the market on a Friday, they will have through the close of trading that day to make the requested trade.

 

(c)                                   Submission of a request from the Access Person will be deemed to evidence a representation that the Access Person is not aware that the execution of the requested transaction in the Security would violate this Code of Ethics, this Personal Trading Policy or the Fund’s insider trading policy.

 

4.                                        Pre-Clearance of Managed Accounts .  Pre-clearance of all Investment Accounts over which an Access Person has no direct or indirect influence or control (i.e., an approved managed account) is to obtained from the Chief Compliance Officer with the following information: the name in which such account will be held (e.g., the employee’s name if applicable) and the financial institution at which such account is held.  Pre-clearance will be denied if the existence of such proposed managed account in the opinion of the Chief Compliance Officer, creates the appearance of a potential conflict with the ongoing activities of the Fund or the Adviser.

 

5.                                        Exceptions to Pre-Clearance Requirements .  Pre-Clearance is not required for transactions involving unaffiliated third party mutual funds (excluding, for the avoidance of doubt, investments in The India Fund Inc. and The Asia Tigers Fund Inc.); investment grade rated municipal bonds; securities and derivatives on broad-based indices; US Treasury or agency obligations; and variable annuities.  Pre-clearance is required for transactions involving Exchange Traded Funds.

 

E.                                       Reporting and Other Compliance Procedures

 

1.                                        Duplicate Account Statements and Confirmations .  Each Access Person must arrange for the Chief Compliance Officer to receive, concurrently with the Access Person, duplicate copies of confirmations of all transactions in, and account statements with respect to, the Access Person’s

 

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Investment Accounts.  This requirement can generally be satisfied by providing for delivery of such duplicate confirmations and account statements to the Blackstone compliance department.

 

2.                                        Initial Holdings Report .  Within 10 days after the commencement of employment or other affiliation with the Fund or the Adviser, an Access Person must report all of such Access Person’s current holdings of Reportable Securities and statement of managed accounts by promptly completing the response to Item 8 of Blackstone’s Acknowledgment and Disclosure Form, and returning it to the designated recipients.

 

Such report shall contain the following information as requested under Item 7 of Blackstone’s Acknowledgement and Disclosure Form (a “ Securities Holding Report ”) with respect to each Security, which information shall be current as of a date no more than 45 days prior to the date of commencement of employment or other affiliation:

 

·                   The title and type of Security, and, as applicable, the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each Security in which such Access Person has any direct or indirect Beneficial Ownership;

 

·                   The name of any broker, dealer or bank with which such Access Person maintains an Investment Account in which any Securities are held for the Access Person’s direct or indirect benefit;

 

·                   a list of all Investment Accounts over which such Access Person has no direct or indirect influence or control (i.e., an approved managed account); and

 

·                   The date such Access Person submits the report.

 

As part of orientation for all new Employees, the Chief Compliance Officer or his or her designee shall notify all new Employees about the initial report requirements of Access Persons.  The Office Manager shall notify the Chief Compliance Officer of all new Employees, including full-time consultants and long-term temporary workers and contractors on more than a three-month assignment.

 

3.                                        Annual Holdings Report .  Each year, each Access Person shall submit a Securities Holdings Report disclosing such Access Person’s current holdings of Reportable Securities.

 

4.                                        Quarterly Transaction Reporting .  Each Access Person shall submit to the Chief Compliance Officer within 30 days after the end of each calendar quarter, a Quarterly Transaction Report (a form of which is attached as Attachment A) disclosing the following information about each transaction in a Reportable Security in which such Access Person had, or as a result of the transaction acquired, any direct or indirect Beneficial Ownership during such quarter, other than transactions reported to the Chief Compliance Officer (or his designee) on a duplicate account statement or confirmation:

 

·                   The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares and principal amount;

·                   The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

·                   The price of the Security at which the transaction was effected;

 

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·                   The name of the broker, dealer or bank with or through whom the transaction was effected; and

·                   The date the report is submitted.

 

The foregoing requirement can generally be satisfied by delivering the Quarterly Transaction Report to the Blackstone compliance department.

 

5.                                        Exceptions to Reporting Requirements .  Notwithstanding the foregoing,

 

(a)                       An Employee shall not be required to submit a Securities Holdings Report with respect to Securities held in any Investment Account over which such Access Person has no direct or indirect influence or control (i.e., an approved managed account).

 

(b)                      An Employee shall not be required to submit a Securities Holdings Report with respect to transactions involving unaffiliated third party mutual funds; investment grade rated municipal bonds; securities and derivatives on broad-based indices; US Treasury or agency obligations; and variable annuities.

 

F.                                       Compliance Monitoring and Supervisory Review

 

1.                                        The Chief Compliance Officer may exempt any transaction from one or more trading prohibitions in writing under limited circumstances if the transaction is not inconsistent with the purpose of this Personal Trading Policy and does not amount to a waiver of a fundamental request contained in the Code that has been adopted to meet applicable requirements under the 1940 Act.

 

2.                                        The Chief Compliance Officer shall report material issues under this Personal Trading Policy immediately to the Fund’s senior management.  At least annually, the Chief Compliance Officer shall prepare a written report to the Board of Trustees, that:

 

·                   Describes issues that have arisen under this Personal Trading Policy since the last report, including, but not limited to, material violations of this Personal Trading Policy or procedures that implement this Personal Trading Policy and any sanctions imposed in response to those violations; and

 

·                   Certifies that the Fund has adopted procedures reasonably necessary to prevent Employees from violating this Personal Trading Policy.

 

G.                                      Sanctions

 

Upon discovering that an Employee has not complied with the requirements of this Personal Trading Policy, the Fund may, subject to applicable law or regulation, impose on that person whatever sanctions are deemed appropriate, including censure, fine, reversal of transactions, disgorgement of profits (by donation to a charity of the Fund’s choice where permissible under applicable law), suspension, or termination of employment, and where appropriate, may make referral to relevant government authorities and self-regulatory organizations.

 

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H.                                     Confidentiality

 

All information obtained from Employees under this Personal Trading Policy shall be kept in strict confidence by the Fund and the Adviser, except that personal trading information will be made available to any regulatory or self-regulatory organization to the extent required by applicable law or regulation or where referral is deemed appropriate.  To the extent permissible under applicable law or regulation, the Fund may also make each Employee’s information available to such person’s manager(s) and the Chief Operating Officer to consider the violations of this Personal Trading Policy.  To the extent required by applicable law, the sharing of such information will be subject to a data confidentiality agreement with the entity receiving such information.

 

I.                                          Further Information

 

Any questions regarding the Personal Trading Policy should be directed to the Chief Compliance Officer or his or her designee.

 

VII.                             RECORD RETENTION

 

All Employees must abide by the records retention schedule that is part of the Adviser’s Compliance Policy Manual.

 

VIII.                         REPORTING ILLEGAL OR UNETHICAL BUSINESS BEHAVIOR

 

Employees are encouraged to report violations of this Code of Ethics or other illegal or unethical behavior to the Chief Compliance Officer or any member of the Board of Trustees.  Employees are also encouraged to discuss situations that may present ethical issues with such persons.  The Fund will endeavor to maintain the confidentiality of reported violations, subject to applicable law, regulation or legal proceedings.

 

The Fund will not permit retaliation of any kind by, or on behalf of, the Fund, the Adviser or any Employee against any individual for making good faith reports of violations to this Code of Ethics.

 

IX.                                 RECORDKEEPING

 

The Chief Compliance Officer shall retain copies of this Code of Ethics, as supplemented, amended or restated from time to time, and all other book and records specified in Rule 17j-1 of the 1940 Act, for the time periods specified therein.

 

XI.                                 EFFECTIVENESS

 

This updated Code of Ethics is effective as of April 26, 2010.

 

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ATTACHMENT A

 

QUARTERLY TRANSACTION REPORT

 

For the Quarter ended                                     , 20

 

The following is a record of every transaction in which I had, or by reason of which I acquired, Beneficial Ownership of a Reportable Security during the Quarter, other than transactions which were previously reported on a duplicate account statement or confirmation and reported to the Chief Compliance Officer.

 

Transaction Date

Issuer and Security Title

CUSIP or Exchange Ticker (if applicable)

Buy/Sell/Other

Number of Shares or Principal Amount

Interest Rate and Maturity Date (if applicable)

Price Per Unit

Transacting Broker, Dealer or Bank

 

Date Submitted		Signature
		Please Print Your Name

 

PLEASE FILL IN ALL NECESSARY INFORMATION IN EVERY COLUMN.  IF MORE SPACE IS NEEDED, PLEASE ATTACH ADDITIONAL PAPER USING THE SAME FORMAT.

 

Note:  This report shall not be construed as an admission by me that I have acquired Beneficial Ownership of any of the Securities listed above.

 

Exhibit 99 (r) (2)

 

Composite Copy (Including 1940 Act Supplement)

 

CODE OF ETHICS

 

(EFFECTIVE: JANUARY 1, 2006)

 

I.                                          INTRODUCTION

 

Conducting ourselves in an ethical manner is a cornerstone of our business model. We greatly value our reputation for honesty and integrity and believe that this reputation is one of our competitive strengths.  Each of us should strive every day to ensure that our ethical values are conveyed through our contacts with colleagues, clients, business partners and competitors.  We will ultimately be judged not only by our results, but by the path we took to achieve them.  All of us have a responsibility to each other to act in a manner that demonstrates our commitment to the highest standards of integrity.

 

This Code of Ethics has been adopted to help us ensure that our high ethical standards are maintained and to preclude circumstances which may lead to or give the appearance of conflicts of interest, insider trading or unethical business conduct.    Adherence to the Code of Ethics, both in letter and in spirit, is fundamental and an absolute condition of employment.

 

The Code of Ethics can only provide guidelines.  It cannot address every circumstance in which we may be called upon to observe and practice sound business ethics.  Therefore, every Employee of GSO and every person who is supervised by an Employee of GSO is expected to conduct himself or herself with good judgment, question and report inappropriate business conduct or unethical behavior by others, and bring questions or concerns to the attention of the Chief Compliance Officer and the Chief Operating Officer.

 

A.                                    Availability of Code of Ethics, Certification

 

The Chief Compliance Officer shall provide a copy of this Code of Ethics, and any supplement, amendment or restatement of this Code of Ethics, either in paper or electronically, (i) to all current GSO Employees promptly following its adoption by GSO, and (ii) to any new GSO Employees promptly upon the commencement of association with GSO.  All GSO Employees are required to read this Code of Ethics (as supplemented, amended or restated, if applicable) and to certify of their having received, read and understood these materials.

 

B.                                      Other Applicable GSO Policies

 

In addition to this Code of Ethics, each GSO Employee is subject to the policies and procedures described in the Manual as well as the other Compliance Materials provided by Blackstone.

 

In addition to the Compliance Materials, you may, from time to time, receive (by email or other form of notice) copies of special regulatory or compliance notices or alerts.  Nothing contained in this Code of Ethics should be interpreted as relieving you from the obligation to act in accordance with such alerts or separate policies and procedures.

 

C.                                      Strict Adherence; Reporting Violations; Sanctions

 

Strict adherence to this Code of Ethics is the responsibility of each GSO Employee.

 

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All GSO Employees, and any other persons subject to any provisions of this Code of Ethics must promptly report all violations and apparent violations of this Code of Ethics and the reporting obligations hereunder to the Chief Compliance Officer.

 

Upon discovering that a GSO Employee has not complied with any requirements of, or has otherwise breached, this Code of Ethics, GSO may impose such sanctions as they deem appropriate, including, among other things, disgorgement of profits, censure, suspension and/or termination of employment.  All material violations of requirements of this Code of Ethics and any sanctions imposed shall be promptly reported to senior management of GSO.

 

II.                                      STATEMENT OF STANDARDS OF BUSINESS CONDUCT

 

A.                                    Fair Dealing

 

GSO Employees should not take unfair advantage of any other party through fraud, manipulation, concealment, abuse of privileged information, misrepresentation or omission of material facts, or any other unfair practices. Every GSO Employee should endeavor to deal fairly with GSO’s clients, officers, Employees, suppliers, and competitors.

 

B.                                      General Fiduciary Duty

 

1.                                        As an investment adviser, GSO is a fiduciary and owes its clients an affirmative duty of utmost good faith, undivided loyalty, full and fair disclosure of all material facts, and an affirmative obligation to employ reasonable care to avoid misleading clients.  It is the duty of all GSO Employees to:

 

·                   Place the interests of clients first at all times;

 

·                   Conduct personal trading in a manner to avoid any potential or actual conflicts of interest or abuse of their fiduciary position of trust, loyalty and interest;

 

·                   Not take, directly or indirectly, inappropriate advantage of their positions or abuse their fiduciary position of trust, loyalty and interest; and

 

·                   Comply with all applicable federal securities laws.

 

2.                                        No GSO Employee shall utilize information concerning prospective or actual portfolio holdings or transactions in any manner which might prove detrimental to the interests of a client.

 

3.                                        No GSO Employee shall use his or her position for his or her personal benefit or attempt to cause a client to purchase, sell or hold a particular security when that action may reasonably be expected to create a personal benefit for such GSO Employee.

 

4.                                        This Code of Ethics applies to transactions in securities for personal accounts of GSO Employees and any other accounts in which they have any beneficial ownership or control.  It imposes certain investment restrictions and prohibitions and requires the reports identified herein.  If GSO Employees become aware of material non-public information or if a client is active in a specific security,

 

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some personnel may find themselves “frozen” in a position — e.g., unable to buy or sell.  Any losses in personal accounts resulting from the implementation of any portion of this Code of Ethics will be borne by such GSO Employee holding such account and will not be borne by GSO or its clients.

 

C.                                      Conflicts of Interest

 

While affirming its confidence in the integrity and good faith of all GSO Employees, GSO recognizes that certain Employees have or may have knowledge of present or future portfolio transactions and, in certain instances, the power to influence portfolio transactions made by clients.  Furthermore, if such individuals engage in personal securities transactions, these individuals could be in a position where their personal interests may conflict with the interests of clients.  Accordingly, this Code of Ethics is designed to prevent conduct that could create an actual or potential conflict of interest with any client.

 

You should avoid actual or apparent conflicts of interest — that is, any personal interest outside of GSO which could be placed ahead of your obligations to GSO and its clients.  Conflicts may exist even when no wrong is committed.  The opportunity to act improperly may be enough to create the appearance of a conflict.

 

Some examples of a potential conflict of interest include:

 

·                   owning a material financial interest in any GSO competitor or an entity that currently does business or is seeking to do business with GSO;

·                   performing services for, being employed by, serving on the board of directors, or serving as an officer of any such entity;

·                   investing in such a way that could compromise one’s ability to perform his or her duties to GSO; or

·                   having an immediate family member who engages in any of the activities identified in this code.

 

GSO recognizes and respects an Employee’s right of privacy concerning personal affairs, but requires full and timely disclosure of any situation which could result in a conflict of interest or even the appearance of a conflict.  Whether or not a conflict exists will be determined by the Chief Compliance Officer, not by the GSO Employee involved.

 

To reinforce our commitment to the avoidance of potential conflicts of interest, the following rules have been adopted:

 

1.                                        You may not act on behalf of GSO in connection with any transaction in which you have a personal interest.  You are expected to bring such personal interests to the attention of the Chief Compliance Officer, even when you may have already described the possibility of a conflict of interest if such disclosure was not in the context of a specific transaction.

 

2.                                        You may not, without prior approval, have a substantial interest in any outside business which, to your knowledge, is involved currently in a business transaction with GSO, or is engaged in businesses similar to any business engaged in by GSO.  A substantial interest includes any investment in the outside business involving an amount greater than 10 percent of your gross assets, or $10,000, if that amount is larger, or involving an ownership interest greater than 2 percent of the entity’s outstanding equity interests.

 

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3.                                        You may not, without prior approval of the Chief Compliance Officer, engage in any transaction involving the purchase of products and/or services from GSO, except on the same terms and conditions as they are offered to the public.

 

4.                                        In addition to the foregoing general principles, the following specific business activity rules shall apply to all GSO Employees:

 

(a)                       Retention of Suppliers .  The choice of our suppliers must be based on quality, reliability, price, service and technical advantages.

 

(b)                      Gifts .  GSO Employees and their immediate families should not solicit, accept, retain or provide any gifts or favors which might influence decisions you or the recipient must make in business transactions involving GSO or which others might reasonably believe could influence those decisions.  Even a nominal gift should not be accepted if, to a reasonable observer, it might appear that the gift would influence your business decisions.

 

Modest gifts and favors, which would not be regarded by others as improper, may be accepted or given on an occasional basis.  Examples of such gifts are those received as normal business courtesies (e.g., a bottle of wine or tickets to a sporting game); non-cash gifts of nominal value (such as received at holiday time); and gifts received because of kinship, marriage or social relationships entirely beyond and apart from an organization in which membership or an official position is held.

 

In addition, entertainment (meaning generally that the person paying for the expense is present) may be accepted on an occasional basis if it would not reasonably be regarded by others as improper.  Examples of entertainment include an occasional meal or greens fees for a golf outing.  Generally, (a) no gift may be accepted or provided that exceeds $100 in value and (b) no entertainment may be accepted if you reasonably believe the cost will exceed $400 without prior approval from the Chief Compliance Officer.

 

If you have any questions regarding whether a gift or entertainment may be accepted or retained, you should contact the Chief Compliance Officer.

 

(c)                       Improper Payments — Kickbacks .  In the conduct of GSO’s business, no bribes, kickbacks or similar remuneration or consideration of any kind are to be given or offered to any individual or organization or to any intermediaries such as agents, attorneys or other consultants, for the purpose of influencing such individual or organization in obtaining or retaining business for, or directing business to, GSO.

 

(d)                      Books, Records and Accounts .   The integrity of the accounting records of GSO is essential.  All receipts and expenditures, including personal expense statements, must be supported by documents that accurately and properly describe such expenses.  Staff members responsible for approving expenditures or for keeping books, records and accounts for GSO are required to approve and record all expenditures and other

 

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entries based upon proper supporting documents so that the accounting records of GSO are maintained in reasonable detail and reflect accurately and fairly all transactions of GSO, including the disposition of its assets and liabilities.  The falsification of any book, record or account of GSO and the submission of any false personal expense statement, claim for reimbursement of a non-business personal expense, or false claim for an employee benefit plan payment are prohibited.

 

(e)                       Political Contributions .  As a result of certain requirements of our and our affiliates’ investors, GSO Employees must pre-clear any political contribution or donations with the Chief Compliance Officer and the Chief Legal Officer of Blackstone (clearance requests should be sent to the Chief Legal Officer of Blackstone at politicalcontributionsclearance@blackstone.com).

 

D.                                     Protection and Proper Use of Firm Assets

 

All GSO Employees should protect and safeguard GSO’s assets from harm. Theft, misappropriation or intentional destruction of GSO’s assets is in direct violation of our obligations to our clients, partners, Employees, and stakeholders. GSO’s assets should only be used for approved purposes.

 

III.                                  TREATMENT OF CONFIDENTIAL INFORMATION

 

As a result of your employment with GSO, you will have access to information that is not generally known to the public or to our industry (“ confidential information ”).  Employees of GSO must not disclose any confidential information entrusted to them by GSO, a client of GSO or any other partner or business counterparty of GSO, to any third party, except when disclosure is required by laws, regulations or legal proceedings; or when such disclosure is authorized by the Chief Operating Officer or the Chief Compliance Officer.  Further, GSO Employees should only use confidential information to further GSO’s business.

 

Confidential information may include, but is not limited to, information relating to proposed, ongoing or completed transactions of GSO, client information, client lists (past, present, or prospective), credit files, Investment Committee reviews, trade secrets, marketing plans, (including plans for trademarks, service marks and copyrighted materials), confidential financial information of GSO and business plans.

 

Whenever feasible, Employees should consult with the Chief Operating Officer or the Chief Compliance Officer if they believe they have a legal obligation to disclose confidential information.

 

Upon the termination of employment, or whenever GSO shall request, you shall deliver to GSO all confidential information in your possession or control, including all copies, or other reproductions, of the information.  GSO is entitled to obtain injunctive relief to prevent threatened and/or actual violations of your agreement not to disclose confidential information.

 

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III.                                  Password Protection of Copyrighted Material

 

Employees should not make use of any passwords to a subscription account other than accounts for which they are the subscriber.  In addition, Employees should not share passwords to any accounts with anyone inside or outside the Firm.  This password sharing may violate intellectual property laws and, if engaged, could subject GSO to significant economic damages.

 

IV.                                 COMPLIANCE WITH FEDERAL SECURITIES LAWS

 

GSO’s activities must always be in full compliance with applicable client guidelines as well as all applicable laws and regulations.  It is GSO’s policy to be in strict compliance with the federal securities laws as well as all other laws and regulations that apply to our business.  For purposes of this Code of Ethics, the federal securities laws includes the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and Title V of the Gramm-Leach-Bliley Act and any rules adopted by the SEC under any of the foregoing statutes.

 

We recognize that some laws and regulations may be ambiguous and difficult to interpret.  A good faith effort to follow the spirit and intent of all laws is required by all GSO Employees.  To ensure compliance, GSO intends to educate its Employees on laws related to its activities which may include periodically issuing bulletins, manuals and memoranda.  GSO Employees are expected to read all such materials and be familiar with their contents.

 

V.                                     INSIDER TRADING

 

Section 204A of the Investment Advisers Act of 1940 requires investment advisers to establish, maintain and enforce policies and supervisory procedures designed to prevent the misuse of material non-public information by such an investment adviser or any associated person.  In accordance with such Section, GSO has established policies and procedures designed to detect and prevent insider trading.

 

VI.                                 PERSONAL TRADING POLICY

 

A.                                    Applicability

 

This Personal Trading Policy establishes rules of conduct for GSO Employees when conducting personal investment activities.  Each GSO Employee is required to observe the specific personal trading rules and requirements set forth herein.

 

You should ensure that you fully understand how this Personal Trading Policy applies to your activities.  If you have any questions, contact the Chief Compliance Officer.  Violations of this Personal Trading Policy may be grounds for disciplinary action, including dismissal and, where appropriate, referral to relevant government authorities and self-regulatory organizations.  Any circumvention of this Personal Trading Policy will be treated as a violation.

 

B.                                      Defined Terms

 

For purposes of this Personal Trading Policy, the following terms have the meanings indicated:

 

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1.                                        “ Automatic Investment Plan ” means a program, including a dividend reinvestment plan, in which regular periodic purchases or withdrawals are made automatically in or from an Investment Account in accordance with a predetermined schedule and allocation.

 

2.                                        “ Beneficial Ownership ” means “beneficial ownership” as interpreted under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

 

A GSO Employee generally has Beneficial Ownership of Securities if the GSO Employee (directly or indirectly), through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the Securities.  The term “pecuniary interest” generally means the opportunity (directly or indirectly) to profit or share in any profit from a transaction in the Securities.  The following are examples of an “indirect pecuniary interest”:

 

·                   Securities held by members of the person’s immediate family sharing the same household (the term “immediate family” includes any child, grandchild, parent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, as well as adoptive and step relationships);

 

·                   A general partner’s proportionate interest in the portfolio securities held by a general or limited partnership;

 

·                   An interest in certain trusts; and

 

·                   A right to acquire equity Securities through the exercise or conversion of any derivative Security, whether or not presently exercisable.

 

A person who is a shareholder of a corporation or similar entity is not deemed to have a pecuniary interest in portfolio Securities held by the corporation or the entity and does not have or share investment control over the corporation’s or the entity’s portfolio.  The term “control” means the power to exercise a controlling influence over management or policies, unless the power is solely the result of an official position with the company.

 

3.                                        “ GSO Employee ” means any officer, director, partner or employee of GSO (or one of its affiliates on behalf of GSO), and any other person who provides investment advice on behalf of GSO and is subject to the supervision and control of GSO.

 

4.                                        “ Initial Public Offering ” or “ IPO ” means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

5.                                        “ Investment Account ” means any brokerage, investment advisory, banking or other account through which a GSO Employee has or may acquire Beneficial Ownership of Securities.

 

6.                                        “ Limited Offering ” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(6) thereof, or pursuant to Rules 504, 505 or 506 of Regulation D under the Securities Act of 1933.

 

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