Page 8 of 10 – SEC Filing
EXHIBIT 99.1
AGREEMENT
This Agreement (this “Agreement”) is made and entered into on January 22, 2018, and effective as of such date (the “Effective Date”) by and between Morgan Stanley Investment Management Inc. (“MSIM”) and Karpus Management, Inc. d/b/a Karpus Investment Management (together with its present or future affiliates, “Karpus”).
WHEREAS, MSIM is an investment adviser registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended, and is the investment adviser to Morgan Stanley Income Securities Inc. (“ICB”), a closed-end management investment company, the shares of common stock of which are publicly traded;
WHEREAS, Karpus and certain funds and accounts discretionarily advised, managed, sponsored or controlled by Karpus (“Karpus Discretionary Accounts”) are stockholders of ICB;
WHEREAS, Karpus and ICB entered into a Non-Disclosure Agreement as of January 8, 2018 (the “NDA”) in order to engage in discussions regarding ICB, Karpus’ investment in ICB and one or more proposals with respect to ICB (the “ICB Discussions”) and in connection with such ICB Discussions acquire from ICB and its officers, agents and legal counsel certain oral and written Confidential Information (as such term defined in the NDA);
WHEREAS, in the course of the ICB Discussions, MSIM discussed with Karpus a proposal whereby ICB would merge with and into an existing Morgan Stanley advised open-end mutual fund with similar investment objectives to ICB, which proposal MSIM has presented to the Board of Directors of ICB (the “ICB Board”) for approval (the “ICB Proposal”);
WHEREAS, the ICB Board has approved the ICB Proposal and is expected to recommend the ICB Proposal for consideration and approval by ICB’s stockholders at a future special meeting of stockholders (the “ICB Special Meeting”), which would be described in a definitive proxy statement to be filed with the SEC and distributed to stockholders of record (the “ICB Proxy”); and
WHEREAS, Karpus and MSIM wish to memorialize their agreement to certain terms arising out of the ICB Discussions with respect to future activities pertaining to ICB and other management investment companies currently advised, managed or sponsored by MSIM, with such management investment companies set forth on Schedule A attached hereto (collectively, the “MSIM Funds”) in which Karpus may be an investor;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the parties agree as follows:
1. With respect to ICB, (a) Karpus shall (i) retain its current investment in ICB until the record date stated in the ICB Proxy and cause all shares of ICB held by Karpus and/or Karpus Discretionary Accounts to be retained and shall not grant any proxy over any such shares or otherwise dispose of beneficial ownership of such shares, (ii) vote and/or cause all of its shares of ICB held by Karpus and/or Karpus Discretionary Accounts to be voted at the ICB Special Meeting in accordance with the recommendations of the ICB Board as set forth in the ICB Proxy, and (b) Karpus shall not (and shall not cause its officers, directors and present or future affiliates), directly or indirectly, solicit, recommend, vote for, or encourage any other person or entity to solicit or vote for, formally or informally, or otherwise invite, initiate or take any action that would impede or interfere with the recommendations of the ICB Board contained in the ICB Proxy or lead to a proposal from any other person regarding the proposals set forth in the ICB Proxy. Notwithstanding clause 1(a) above, Karpus shall be permitted to sell any ICB shares on behalf of its Karpus Discretionary Accounts that it is specifically directed to sell.
2. With respect to the MSIM Funds, for a period of two years year from the Effective Date (the “Restricted Period”), Karpus shall not: (i) submit any stockholder proposals for the vote or consent (collectively, “vote”) of stockholders (whether or not pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or otherwise); (ii) nominate any candidate for election as a director or trustee; (iii) solicit proxies for any stockholder proposals or nominations of candidates for election as directors or trustees of any MSIM Fund; (iv) directly or indirectly, encourage, recommend, advise or urge others to put forward stockholder proposals, including any proposal to replace the investment adviser or manager or sub-adviser of any MSIM Fund, or nominations with respect to directors or trustees of any MSIM Fund; (v) directly or indirectly, indicate support or approval for any stockholder proposals or nominations relating to any MSIM Fund (except by voting pursuant to clause (vi) of this sentence); (vi) directly or indirectly, cause or permit shares of any MSIM Fund held by Karpus and/or Karpus Discretionary Accounts to be voted on any matter in any way other than in accordance with the recommendations of that MSIM Fund’s Board; or (viii) directly or indirectly, solicit or encourage others to vote against any matter recommended by a MSIM Fund’s Board of Directors or Trustees, except with respect to any proposed change to a MSIM Fund’s fundamental investment policy, upon which Karpus shall vote as it so determines.
3. During the Restricted Period, each party hereto shall, and shall instruct its controlled affiliates to, refrain from directly or indirectly disparaging, impugning or taking of any action reasonably likely to damage the reputation of the other party, any MSIM Fund or the Board of Directors or Trustees of any MSIM Fund. The foregoing shall not apply to any compelled testimony or production of information, either by legal process or subpoena or in connection with a response to a request for information from any governmental authority with jurisdiction over the party from whom information is sought.
4. Other than pursuant to and in accordance with the last sentence of Section 3, as made public by MSIM or the MSIM Funds, or as may be required by law or regulatory process or agency, such as in connection with publication of the ICB Proxy, all terms and provisions of this Agreement shall remain confidential. For the avoidance of doubt, the parties acknowledge that Karpus is required to file a copy of this Agreement with its Schedule 13D (to be filed with the SEC promptly following the date of this Agreement), and following such filing this Agreement shall no longer be confidential. ICB shall issue a press release disclosing this Agreement promptly following approval, a copy of which is attached hereto as Exhibit A.
5. MSIM shall use its best efforts to cause ICB to recommend the approval of the ICB Proposal by ICB’s Stockholders, and to engage a proxy solicitor and use all commercially reasonable efforts to cause the approval of the ICB Proposal by ICB’s stockholders.
6. This Agreement shall terminate upon the earlier to occur of: (i) the ICB Proxy is not filed with the Securities Exchange Commission on or prior to March 15, 2018; (iii) the ICB Special Meeting is not held on or prior to June 22, 2018; (iii) the ICB Proposal is not approved by ICB shareholders on or prior to June 22, 2018; or (iv) the ICB proposal is not implemented by ICB on or prior to July 31, 2018. Sections 7-11 shall survive any such termination.
7. Any notices hereunder shall be delivered by email or facsimile, with a copy by ordinary mail, directed as follows:
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- To the MSIM Funds and MSIM, by delivery to:
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Morgan Stanley Investment Management Inc.
Attention: Office of the Funds
522 Fifth Avenue, 5th Floor
New York, New York 10036
With a copy to:
Morgan Stanley Investment Management Inc.
Attention: General Counsel
522 Fifth Avenue, 19th Floor
New York, New York 10036
To Karpus, by delivery to:
Daniel L. Lippincott, CFA
Director of Investment Personnel and Sr. Tax-Sensitive Manager
Karpus Investment Management
183 Sully’s Trail
Pittsford, New York 14534
Email: daniel@karpus.com
Telephone: (585) 586-4680
Facsimile: (585) 586-4315
With a copy to:
Adam W. Finerman, Esq.
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
Email: afinerman@olshanlaw.com
Telephone: (212) 451-2289
Facsimile: (212) 451-2222
8. This Agreement shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, successors and assigns and shall be for the benefit of and enforceable by each MSIM Fund and its successors and assigns.
9. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws provisions. The parties agree that the state and federal courts of the State of New York shall be the proper forums for any legal controversy arising in connection with this Agreement, and the parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of such courts for such purposes. Except as prohibited by law, none of the parties shall seek a jury trial in any legal controversy arising in connection with this Agreement. None of the parties will seek to consolidate any such action in which a jury trial has been waived with any other action in which a jury trial has not been waived. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS.
11. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof, and may be modified or amended only by a writing signed by an authorized representative of each of the parties hereto. No representations, warranties, or inducements have been made by any party hereto concerning this Agreement other than those contained and memorialized herein. This Agreement is the product of mutual bargaining between and among the parties and, therefore, will not be construed against one party or another.
| MORGAN STANLEY INVESTMENT MANAGEMENT INC. | |||
| By: | /s/ Mary Alice Dunne | ||
| Name: | Mary Alice Dunne | ||
| Title: | Managing Director | ||
| KARPUS MANAGEMENT, INC. D/B/A KARPUS INVESTMENT MANAGEMENT | |||
| By: | /s/ Daniel L. Lippincott | ||
| Name: | Daniel L. Lippincott | ||
| Title: | Director of Investment Personnel and Sr. Tax-Sensitive Portfolio Manager | ||
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