SC TO-I

0001193125-22-164833.txt : 20220601 0001193125-22-164833.hdr.sgml : 20220601 20220601111138 ACCESSION NUMBER: 0001193125-22-164833 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20220601 DATE AS OF CHANGE: 20220601 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Western Asset Middle Market Income Fund Inc. CENTRAL INDEX KEY: 0001525355 IRS NUMBER: 452641964 STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-89393 FILM NUMBER: 22986410 BUSINESS ADDRESS: STREET 1: 620 EIGHTH AVENUE, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: (888) 777-0102 MAIL ADDRESS: STREET 1: 620 EIGHTH AVENUE, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: Western Asset Middle Market & High Yield Fund Inc. DATE OF NAME CHANGE: 20110913 FORMER COMPANY: FORMER CONFORMED NAME: Western Asset Middle Market Income Fund Inc. DATE OF NAME CHANGE: 20110711 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Western Asset Middle Market Income Fund Inc. CENTRAL INDEX KEY: 0001525355 IRS NUMBER: 452641964 STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 620 EIGHTH AVENUE, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: (888) 777-0102 MAIL ADDRESS: STREET 1: 620 EIGHTH AVENUE, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: Western Asset Middle Market & High Yield Fund Inc. DATE OF NAME CHANGE: 20110913 FORMER COMPANY: FORMER CONFORMED NAME: Western Asset Middle Market Income Fund Inc. DATE OF NAME CHANGE: 20110711 SC TO-I 1 d293633dsctoi.htm SC TO-I SC TO-I

As filed with the Securities and Exchange Commission on June 1, 2022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

Western Asset Middle Market Income Fund Inc.

(Name of Subject Company (issuer))

Western Asset Middle Market Income Fund Inc.

(Name of Filing Person (offeror))

Common Stock $.001 Par Value Per Share

(Title of Class of Securities)

95790G108

(CUSIP Number of Class of Securities)

GEORGE P. HOYT, ESQ.

SECRETARY

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

100 FIRST STAMFORD PLACE, 6TH FLOOR

STAMFORD, CONNECTICUT 06902

(203) 703-7026

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement)

Copy to:

David W. Blass, Esq.

Ryan P. Brizek, Esq.

Simpson Thacher & Bartlett LLP

900 G Street, NW

Washington D.C. 20001

(202) 636-5500

☐	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.


Amount Previously Paid:	Not Applicable	Filing Party:	Not Applicable
Form or Registration No.:	Not Applicable	Date Filed:	Not Applicable

☐	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which this statement relates:

☐

third party tender offer subject to Rule 14d-1

☒

issuer tender offer subject to Rule 13e-4

☐

going-private transaction subject to Rule 13e-3

☐

amendment to Schedule 13D under Rule 13d-2

Check the following box if the filing is a final amendment reporting the results of the tender offer. ☐

Introductory Statement

This Issuer Tender Offer Statement on Schedule TO relates to an offer by Western Asset Middle Market Income Fund Inc., a Maryland corporation (the “Fund”), to purchase for cash up to 2.5% of the Fund’s outstanding shares of Common Stock, par value $.001 per share (the “Shares”), upon the terms and subject to the conditions contained in the Offer to Purchase dated June 1, 2022 and the related Letter of Transmittal, which are filed as exhibits to this Schedule TO. In addition, in accordance with the rules promulgated by the Securities and Exchange Commission, the Fund may purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer to Purchase.

This Issuer Tender Offer Statement on Schedule TO is being filed in satisfaction of the reporting requirements of Rule 13e-4(c)(2) promulgated under the Securities Exchange Act of 1934, as amended.

The information in the Offer to Purchase and the related Letter of Transmittal is incorporated herein by reference in response to all of the items of this Schedule TO, as more particularly described below.

ITEM 1. SUMMARY TERM SHEET.

The information set forth under “Summary Term Sheet” in the Offer to Purchase is incorporated herein by reference.

ITEM 2. SUBJECT COMPANY INFORMATION.

(a) and (b) The information set forth in the Offer to Purchase under “Introduction” and under Section 9 (“Certain Information Concerning the Fund, the Investment Manager and the Subadviser”) is incorporated herein by reference.

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.

(a) The Fund is the filing person. The information set forth in the Offer to Purchase under Section 9 (“Certain Information Concerning the Fund, the Investment Manager and the Subadviser”) is incorporated herein by reference.

(b)-(d) Not applicable.

ITEM 4. TERMS OF THE TRANSACTION.

(a) The following sections of the Offer to Purchase contain a description of the material terms of the transaction and are incorporated herein by reference:

•

“Summary Term Sheet”;

•

“Introduction”;

•

Section 1 (“Terms of the Offer; Termination Date”);

•

Section 2 (“Acceptance for Payment and Payment for Shares”);

•

Section 3 (“Procedure for Tendering Shares”);

•

Section 4 (“Rights of Withdrawal”);

•

Section 5 (“Source and Amount of Funds; Effect of the Offer”);

•

Section 7 (“Federal Income Tax Consequences of the Offer”);

•

Section 10 (“Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares”); and

•

Section 12 (“Certain Conditions to the Offer”).

(a)(2) Not applicable.

(b) The information set forth in the Offer to Purchase under “Introduction” and under Section 10 (“Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

(c)-(f) Not applicable.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

(e) The information set forth in the Offer to Purchase under Section 6 (“Purpose of the Offer; Plans or Proposals of the Fund”) and Section 10 (“Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

(a), (b) and (c) The information set forth in the Offer to Purchase under Section 6 (“Purpose of the Offer; Plans or Proposals of the Fund”) is incorporated herein by reference.

ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a), (b) and (d) The information set forth in the Offer to Purchase under Section 5 (“Source and Amount of Funds; Effect of the Offer”) is incorporated herein by reference.

ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) and (b) The information set forth in the Offer to Purchase under Section 10 (“Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.

ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

(a) Not applicable.

(b) The information set forth in the Offer to Purchase under Section 13 (“Fees and Expenses”) is incorporated herein by reference.

ITEM 10. FINANCIAL STATEMENTS.

Not applicable.

ITEM 11. ADDITIONAL INFORMATION.

(a)(1)-(5) Not applicable.

(b) The information set forth in the Offer to Purchase and the related Letter of Transmittal, copies of which are filed with Exhibits ((a)(1)(i) and (a)(1)(ii) hereto, respectively, as each may be amended or supplemented from time to time, is incorporated herein by reference.

ITEM 12. EXHIBITS


EXHIBIT NO.		DESCRIPTION

(a)(1)(i)		Offer to Purchase, dated June 1, 2022.

(a)(1)(ii)		Form of Letter of Transmittal.

(a)(1)(iii)		Letter to Stockholders.

(a)(2)		None.

(a)(3)		Not Applicable.

(a)(4)		Not Applicable.

(a)(5)		None.

(b)(1)		Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(1) to the Schedule TO filed on February 29, 2016).

(b)(2)		Amendment No. 1 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(2) to the Schedule TO filed on February 29, 2016).

(b)(3)		Amendment No. 2 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(3) to the Schedule TO filed on February 29, 2016).

(b)(4)		Amendment No. 3 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(4) to the Schedule TO filed on February 29, 2016).

(b)(5)		Amendment No. 4 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(5) to Schedule TO filed on September 6, 2016).

(b)(6)		Amendment No. 5 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(6) to the Schedule TO filed on June 4, 2018).

(b)(7)		Amendment No. 6 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(7) to the Schedule TO filed on September 4, 2019).

(b)(8)		Amendment No. 7 to Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(8) to the Schedule TO/A filed on July 9, 2021)

(b)(9)		Notice of Termination of Credit Agreement for Margin Financing with Pershing LLC (incorporated by reference to Exhibit (b)(9) to the Schedule TO filed on December 3, 2021)

(b)(10)		Master Margin Loan Agreement with The Bank of New York Mellon

(d)		None.

(e)		None.

(g)		None.

(h)		None.

(i)		Calculation of Filing Fee Tables

ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3

Not Applicable.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


WESTERN ASSET MIDDLE MARKET INCOME FUND INC.



By:		/s/ Jane E. Trust
Name:		Jane E. Trust
Title:		Chairman, President and Chief Executive Officer

Dated: June 1, 2022

EXHIBIT INDEX


EXHIBIT NO.		DESCRIPTION

(a)(1)(i)		Offer to Purchase, dated June 1, 2022

(a)(1)(ii)		Form of Letter of Transmittal

(a)(1)(iii)		Letter to Stockholders

(b)(10)		Master Margin Loan Agreement with The Bank Of New York Mellon

(i)		Calculation of Filing Fee Tables

EX-99.(A)(1)(I) 2 d293633dex99a1i.htm EX-99.(A)(1)(I) EX-99.(a)(1)(i)

Exhibit (a)(1)(i)

THE OFFER TO PURCHASE

WESTERN ASSET MIDDLE MARKET INCOME FUND INC. (THE “FUND”)

DATED JUNE 1, 2022

OFFER TO PURCHASE FOR CASH UP TO 3,701

SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE (THE “SHARES”), AT NET ASSET VALUE PER SHARE

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM NEW YORK CITY TIME ON JUNE 30, 2022, UNLESS THE OFFER IS EXTENDED

THIS OFFER TO PURCHASE AND THE ACCOMPANYING LETTER OF TRANSMITTAL (WHICH, TOGETHER WITH ANY AMENDMENTS OR SUPPLEMENTS THERETO, COLLECTIVELY CONSTITUTE THE “OFFER”) IS BEING MADE TO ALL STOCKHOLDERS AND IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED, BUT IS SUBJECT TO OTHER CONDITIONS AS OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL.

NONE OF THE FUND, ITS BOARD OF DIRECTORS, LEGG MASON PARTNERS FUND ADVISOR, LLC, THE FUND’S INVESTMENT MANAGER, OR WESTERN ASSET MANAGEMENT COMPANY, LLC, THE FUND’S SUBADVISER, MAKES ANY RECOMMENDATION AS TO WHETHER TO TENDER OR NOT TO TENDER SHARES IN THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THE FUND HAS BEEN ADVISED THAT NO DIRECTOR OR OFFICER OF THE FUND INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER, EXCEPT THAT LEGG MASON, INC. (“LEGG MASON”) RESERVES THE RIGHT TO TENDER SHARES PURSUANT TO THE OFFER. SEE SECTION 6 OF THIS OFFER TO PURCHASE.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

BECAUSE THIS OFFER IS LIMITED AS TO THE NUMBER OF SHARES ELIGIBLE TO PARTICIPATE, NOT ALL SHARES TENDERED FOR PURCHASE BY STOCKHOLDERS MAY BE ACCEPTED FOR PURCHASE BY THE FUND. THIS MAY OCCUR, FOR EXAMPLE, WHEN ONE OR MORE LARGE INVESTORS SEEK TO TENDER A SIGNIFICANT NUMBER OF SHARES OR WHEN A LARGE NUMBER OF INVESTORS TENDER SIMULTANEOUSLY.

IMPORTANT

Any stockholder of the Fund (“Stockholder”) desiring to tender any portion of his or her Shares to the Fund should complete and sign the Letter of Transmittal in accordance with the instructions in the Letter of Transmittal, and mail or deliver the Letter of Transmittal for the tendered Shares, signature guarantees, and any other required documents to Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A. (together, the “Depositary”). The Fund reserves the absolute right to reject Shares determined not to be tendered in appropriate form.

Questions, requests for assistance and requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to Georgeson LLC (the “Information Agent”) in the manner set forth on the last page of this Offer to Purchase.

If you do not wish to tender your Shares, you need not take any action.

June 1, 2022


SUMMARY TERM SHEET		3

INTRODUCTION		6

1.	Terms of the Offer; Termination Date	7

2.	Acceptance for Payment and Payment for Shares	7

3.	Procedure for Tendering Shares	8

4.	Rights of Withdrawal	10

5.	Source and Amount of Funds; Effect of the Offer	10

6.	Purpose of the Offer; Plans or Proposals of the Fund	12

7.	Federal Income Tax Consequences of the Offer	13

8.	Selected Financial Information	15

9.	Certain Information Concerning the Fund, the Investment Manager and the Subadviser	15

10.	Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares	16

11.	Certain Legal Matters; Regulatory Approvals	17

12.	Certain Conditions to the Offer	17

13.	Fees and Expenses	18

14.	Miscellaneous	18

15.	Contacting the Depositary and the Information Agent	18

SUMMARY TERM SHEET

This Summary Term Sheet highlights certain information concerning the Offer. To understand the Offer (as defined below) fully and for a more complete discussion of the terms and conditions of this Offer, you should read carefully this entire Offer to Purchase and the related Letter of Transmittal.

What is the Offer?

The Board of Directors of Western Asset Middle Market Income Fund Inc. (the “Fund”) has authorized a tender offer to purchase for cash up to 2.5% of the Fund’s outstanding Shares, or up to 3,701 Shares, at a price per Share equal to the net asset value per Share as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the New York Stock Exchange (“NYSE”) on June 30, 2022 (or if the Offer is extended, on the date to which the Offer is extended), upon specified terms and subject to conditions of the Offer. Shares are not traded on any established trading market. The Fund reserves the right to purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

When will the Offer expire, and may the Offer be extended?

The Offer will expire at 5:00 p.m., New York City time, on June 30, 2022, unless extended. The Fund may extend the period of time the Offer will be open by issuing a press release or making some other public announcement by no later than the next business day after the Offer otherwise would have expired. See Section 1 of this Offer to Purchase.

What is the net asset value per Share as of a recent date?

As of April 29, 2022, the net asset value per Share was $607.53. As of April 29, 2022, there were 148,078 Shares issued and outstanding. During the pendency of the Offer, current net asset value quotations can be obtained from the Information Agent by calling toll free at (866) 431-2110 between 9:00 a.m. and 9:00 p.m., New York City time, Monday through Friday. You may also call the Fund’s toll free number at (888) 777-0102.

Will the net asset value be higher or lower on the date that the price to be paid for tendered Shares is to be determined?

No one can accurately predict the net asset value at a future date, but you should realize that net asset value on the date the purchase price for tendered Shares is to be determined may be higher or lower than the net asset value on April 29, 2022.

How do I tender my Shares?

You should obtain the Offer materials, including this Offer to Purchase and the related Letter of Transmittal, read them, and if you should decide to tender, complete a Letter of Transmittal and submit any other documents required by the Letter of Transmittal. These materials must be received by the Depositary in proper form before 5:00 p.m., New York City time, on June 30, 2022 (unless the Offer has been extended by the Fund, in which case the new deadline will be as stated in such notification of the extension). See Section 3 of this Offer to Purchase.

Is there any cost to me to tender?

No fees or commission will be payable to the Fund in connection with the Offer. Tendering Stockholders may be obligated to pay brokerage fees or commissions or, subject to Instruction 8 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Fund.

May I withdraw my Shares after I have tendered them and, if so, by when?

Yes, you may withdraw your Shares at any time prior to 5:00 p.m., New York City time on June 30, 2022 (or if the Offer is extended, at any time prior to 5:00 p.m., New York City time, on the new expiration date). Withdrawn Shares may be re-tendered by following the tender procedures before the Offer expires (including any extension period). See Section 4 of this Offer to Purchase.

How do I withdraw previously tendered Shares?

A notice of withdrawal of tendered Shares must be timely received by the Depositary, and must specify the name of the Stockholder who tendered the Shares and the number of Shares being withdrawn (which must be all of the Shares tendered). See Section 4 of this Offer to Purchase.

May I place any condition on my tender of Shares?

No.

Is there a limit on the number of Shares I may tender?

No. However, only 3,701 of the Fund’s outstanding Shares will be accepted for tender. See Section 1 of this Offer to Purchase.

What if more than 3,701 Shares are tendered (and not properly withdrawn)?

The Fund will purchase duly tendered Shares from tendering Stockholders pursuant to the terms and conditions of the Offer by first purchasing shares tendered by any stockholders who own, beneficially or of record, an aggregate amount of 10 shares or less (an “odd lot”) and tender all of their shares. The Fund will then purchase any remaining shares that have been duly tendered on a pro rata basis (disregarding fractions) in accordance with the number of Shares tendered by each Stockholder (and not properly withdrawn), unless the Fund determines not to purchase any Shares in the event that the conditions described in Section 12 of this Offer to Purchase are not met. The Fund’s present intention, if the Offer is oversubscribed, is not to purchase more than 3,701 Shares. See Section 1 of this Offer to Purchase.

Must I tender all of my Shares for repurchase?

No. You may tender for repurchase all or part of the Shares you own.

Does the Fund have the financial resources to make payment?

Yes. The Fund expects to fund the repurchase of Shares in the Offer through cash on hand and/or borrowings under its credit facility/or sales of securities in the Fund’s investment portfolio. See Section 5 of this Offer to Purchase.

Will there be additional opportunities to tender my Shares?

As disclosed in the Fund’s Prospectus, dated August 26, 2014 (the “Prospectus”), in recognition that a secondary market for the Fund’s Shares likely will not exist, Legg Mason Partners Fund Advisor, LLC, the Fund’s Investment Manager (the “Investment Manager”), and Western Asset Management Company, LLC, the Fund’s Subadviser (the “Subadviser”), expect that generally they will recommend to the Board of Directors that the Fund repurchase up to 2.5% of the outstanding Shares from stockholders on a quarterly basis. The Fund anticipates that each such repurchase offer will generally be limited to 2.5% of the net assets of the Fund, subject to modification in the absolute discretion of the Board of Directors. The Fund reserves the right to purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

Is my sale of Shares in the Offer a taxable transaction for U.S. federal income tax purposes?

For most Stockholders, yes. The sale of Shares pursuant to the Offer by U.S. Stockholders (as defined in Section 7), other than those who are tax-exempt, will be a taxable transaction for U.S. federal income tax purposes, either as a sale or exchange, or, under certain circumstances, as a dividend. The Depositary will withhold U.S. federal income taxes equal to 30% of the gross payments payable to Non-U.S. Stockholders (as defined in Section 7) unless the Depositary determines that such Non-U.S. Stockholder is eligible for a reduced rate of withholding pursuant to a treaty or that an exemption from withholding is applicable because the gross proceeds are effectively connected with the conduct of a trade or business within the U.S. See Section 7 of this Offer to Purchase for a more detailed discussion of certain U.S. federal income tax consequences. U.S. and Non-U.S. Stockholders are advised to consult their own tax advisors.

Is the Fund required to complete the Offer and purchase all Shares tendered up to the maximum of 3,701 Shares?

The Fund has the right to cancel, amend or postpone this Offer at any time before 5:00 pm, New York City time, on June 30, 2022. In addition, there are certain circumstances in which the Fund will not be required to purchase any Shares tendered as described in Section 12 of this Offer to Purchase.

Is there any reason Shares tendered will not be accepted?

In addition to those circumstances described in Section 12 of this Offer to Purchase in which the Fund is not required to accept tendered Shares, the Fund has reserved the right to reject any and all tenders determined by it not to be in appropriate form. For example, tenders will be rejected if the tender does not include the original signature(s) or the original of any required signature guarantee(s).

How will tendered Shares be accepted for payment?

Properly tendered Shares, up to the number tendered for, will be accepted for payment by a determination of the Fund followed by notice of acceptance to the Depositary, which thereafter will make payment as directed by the Fund with funds to be deposited with it by the Fund. See Section 2 of this Offer to Purchase.

Although the amounts required to be paid by the Fund will generally be paid in cash, the Fund may under certain limited circumstances pay all or a portion of the amounts due by an in-kind distribution of securities. The Fund intends to make an in-kind payment of securities only under the limited circumstance whereby making a cash payment would result in a material adverse effect on the Fund or on Stockholders.

If Shares I tender are accepted by the Fund, when will payment be made?

It is anticipated that payment for tendered Shares, if accepted, will be made promptly after the Termination Date (as defined below).

What action need I take if I decide not to tender my Shares?

None.

Does management encourage Stockholders to participate in the Offer, and will management participate in the Offer?

None of the Fund, its Board of Directors, the Investment Manager, or the Subadviser makes any recommendation to tender or not to tender Shares in the Offer. The Fund has been advised that no director or officer of the Fund intends to tender Shares, except that Legg Mason reserves the right to tender Shares pursuant to the Offer. See Section 6 of this Offer to Purchase.

How do I obtain additional information?

Questions and requests for assistance should be directed to the Information Agent for the Offer, toll free at (866) 431-2110. Requests for additional copies of the Offer to Purchase, the Letter of Transmittal and all other Offer documents should also be directed to the Information Agent for the Offer.

TO THE STOCKHOLDERS OF SHARES OF COMMON STOCK OF

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

INTRODUCTION

Western Asset Middle Market Income Fund Inc., a Maryland corporation (the “Fund”) registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company, hereby offers to purchase for cash up to 2.5% of the Fund’s outstanding Shares, or up to 3,701 Shares in the aggregate (the “Offer Amount”), at a price (the “Purchase Price”) per Share, equal to the net asset value in U.S. Dollars (“NAV”) per Share as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the NYSE on June 30, 2022 (or if the Offer is extended, on the date to which the Offer is extended), upon the terms and subject to the conditions set forth in the Offer. The depositary for the Offer is Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A. The Fund has provided materials for the Offer to record holders on or about June 1, 2022. In accordance with the rules promulgated by the Securities and Exchange Commission (“SEC”), the Fund may increase the number of Shares accepted for purchase by up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

THIS OFFER IS BEING EXTENDED TO ALL STOCKHOLDERS OF THE FUND AND IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED, BUT IS SUBJECT TO OTHER CONDITIONS AS OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL. SEE SECTION 12 OF THIS OFFER TO PURCHASE.

NONE OF THE FUND, ITS BOARD OF DIRECTORS, THE INVESTMENT MANAGER OR THE SUBADVISER MAKES ANY RECOMMENDATION AS TO WHETHER TO TENDER OR NOT TO TENDER SHARES IN THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THE FUND HAS BEEN ADVISED THAT NO DIRECTOR OR OFFICER OF THE FUND INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER, EXCEPT THAT LEGG MASON, INC. (“LEGG MASON”) RESERVES THE RIGHT TO TENDER SHARES PURSUANT TO THE OFFER. SEE SECTION 6 OF THIS OFFER TO PURCHASE.

As of April 29, 2022, there were 148,078 Shares issued and outstanding, and the NAV per Share was $607.53. Stockholders may contact Georgeson LLC, the Fund’s Information Agent, toll free at (866) 431-2110 or contact the Fund directly at its toll free number, (888) 777-0102, to obtain the estimated current NAV for the Shares.

Any Shares acquired by the Fund pursuant to the Offer will be retired automatically and will have the status of unissued shares. Tendering Stockholders may be obligated to pay brokerage fees or commissions or, subject to Instruction 8 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Fund.

1. Terms of the Offer; Termination Date. Upon the terms and subject to the conditions set forth in the Offer, the Fund will accept for payment, and pay for, up to 2.5% of the Fund’s outstanding Shares, or 3,701 Shares validly tendered on or prior to 5:00 p.m., New York City time, on June 30, 2022, or such later date to which the Offer is extended (the “Termination Date”) and not properly withdrawn as permitted by Section 4. In addition, in accordance with the rules promulgated by the SEC, the Fund may purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

If the number of Shares properly tendered and not properly withdrawn prior to the Termination Date is less than or equal to the Offer Amount, the Fund will, upon the terms and conditions of the Offer, purchase all Shares so tendered. If more than 3,701 of the Fund’s Shares are duly tendered pursuant to the Offer (and not withdrawn as provided in Section 4), unless the Fund determines not to purchase any Shares in the event that the conditions described in Section 12 of this Offer to Purchase are not met, the Fund will purchase Shares from tendering Stockholders, in accordance with the terms and conditions specified in the Offer, by first purchasing shares tendered by any stockholders who own, beneficially or of record, an aggregate amount of 10 shares or less (an “odd lot”) and tender all of their shares. The Fund will then purchase any remaining shares that have been duly tendered on a pro rata basis (disregarding fractions) in accordance with the number of Shares duly tendered by or on behalf of each Stockholder (and not properly withdrawn). Except as described herein, withdrawal rights expire on the Termination Date. The Fund does not contemplate extending the Offer and increasing the number of Shares covered thereby by reason of more than 3,701 of the Fund’s Shares having been tendered.

The Fund expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such notification will be provided no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Termination Date. If the Fund makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Fund will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13(e)-4(e)(3) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). During the extension, all Shares properly tendered and not properly withdrawn previously will remain subject to the Offer, subject to the right of a tendering Stockholder to withdraw his or her Shares.

Subject to the terms and conditions of the Offer, the Fund will pay the consideration offered or return the tendered securities promptly after the termination or withdrawal of the Offer in accordance with the terms as set forth in Section 2 below. Any extension, delay or termination will be followed as promptly as practicable by notification thereof, such notification, in the case of an extension, to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Termination Date.

2. Acceptance for Payment and Payment for Shares. Upon the terms and subject to the conditions of the Offer, the Fund will accept for payment, and will pay for, Shares validly tendered on or before the Termination Date, and not properly withdrawn in accordance with Section 4, promptly after the Termination Date, except in circumstances described below. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of a properly completed and duly executed Letter of Transmittal (or facsimile thereof), and any other documents required by the Letter of Transmittal. The Fund expressly reserves the right, in its sole discretion, to delay the acceptance for payment of, or payment for, Shares, in whole or in part, in order to comply with any applicable law.

If the Fund’s portfolio does not provide adequate liquidity to fund the Offer, the Fund may extend the last day of any tender offer or choose to pay tendering Stockholders with a promissory note, payment on which may be made in cash up to 30 days after the Termination Date (as extended). The promissory note will be non-interest bearing, non-transferable and non-negotiable. With respect to the Shares tendered, the owner of a promissory note will no longer be a Stockholder of the Fund and will not have the rights of a Stockholder, including without limitation voting rights. The promissory note may be prepaid, without premium, penalty or notice, at any time.

For purposes of the Offer, the Fund will be deemed to have accepted for payment Shares validly tendered and not properly withdrawn as, if and when the Fund gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for the tendering Stockholders for purpose of receiving payments from the Fund and transmitting such payments to the tendering Stockholders. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment.

In the event of proration, the Fund will determine the proration factor and pay for those tendered Shares accepted for payment as soon as practicable after the Termination Date. However, the Fund expects that it will not be able to announce the final results of any proration or commence payment for any Shares purchased pursuant to the Offer until at least three business days after the Termination Date.

If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or are not paid because of an invalid tender, such unpurchased Shares will be returned, without expense to the tendering Stockholder, as soon as practicable following expiration or termination of the Offer.

If the Fund is delayed in its acceptance for payment of, or in its payment for, Shares, or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Fund’s rights under this Offer, the Depositary may, on behalf of the Fund, retain tendered Shares, and such Shares may not be withdrawn, unless and except to the extent tendering Stockholders are entitled to withdrawal rights as described in Section 4 of this Offer to Purchase.

The purchase price of the Shares will equal their NAV as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the NYSE on June 30, 2022, or such later date to which the Offer is extended. Tendering Stockholders may be required to pay brokerage commissions or fees. Under the circumstances set forth in Instruction 8 of the Letter of Transmittal, Stockholders may be subject to transfer taxes on the purchase of Shares by the Fund.

The Fund normally calculates the NAV of its Shares daily at the close of regular trading of the NYSE. On April 29, 2022, the NAV was $607.53 per Share. The NAV of the Fund’s Shares will be available daily until the Termination Date, by calling the Fund’s Information Agent, toll free at (866) 431-2110 or through the Fund’s toll free number at (888) 777-0102.

3. Procedure for Tendering Shares. For a Stockholder validly to tender Shares pursuant to the Offer, a properly completed and duly executed Letter of Transmittal, together with any required signature guarantees, and any other documents required by the Letter of Transmittal, must be transmitted to and received by the Depositary at one of its addresses set forth on the last page of this Offer to Purchase.

Signatures on Letters of Transmittal must be guaranteed by a firm which is a broker, dealer, commercial bank, credit union, savings association or other entity and which is a member in good standing of a stock transfer

association’s approved medallion program (such as STAMP, SEMP or MSP) (each, an “Eligible Institution”) unless (i) the Letter of Transmittal is signed by the registered holder of the Shares tendered or (ii) such Shares are tendered for the account of an Eligible Institution. In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 6 of the Letter of Transmittal for further information.

Backup Federal Income Tax Withholding. Backup withholding tax will be imposed on the gross proceeds paid to a tendering U.S. Stockholder (as defined in Section 7) unless the U.S. Stockholder provides such U.S. Stockholder’s taxpayer identification number (employer identification number or social security number) to the Depositary, certifies as to no loss of exemption from backup withholding and complies with applicable requirements of the backup withholding rules, or such U.S. Stockholder is otherwise exempt from backup withholding. Therefore, each tendering U.S. Stockholder should complete and sign the Internal Revenue Service (“IRS”) Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such U.S. Stockholder otherwise establishes to the satisfaction of the Depositary that such U.S. Stockholder is not subject to backup withholding. Certain U.S. Stockholders (including, among others, most corporations) are not subject to these backup withholding requirements. In addition, Non-U.S. Stockholders (as defined in Section 7) are subject to these withholding requirements. In order for a Non-U.S. Stockholder to qualify as an exempt recipient, that Non-U.S. Stockholder must submit an applicable IRS Form W-8 (generally, an IRS Form W-8BEN, W-8BEN-E or W-8ECI). Such statements can be obtained from the Depositary.

To prevent backup U.S. federal income tax withholding, each U.S. Stockholder who does not otherwise establish an exemption from such withholding must provide the Depositary with the Stockholder’s correct taxpayer identification number and provide certain other information by completing the IRS Form W-9 included in the Letter of Transmittal.

For a discussion of certain federal income tax consequences to tendering U.S. Stockholders, see Section 7.

Withholding for Non-U.S. Stockholders. Even if a Non-U.S. Stockholder has provided the required certification to avoid backup withholding, the Depositary will withhold U.S. federal income tax equal to 30% of the gross payments payable to a Non-U.S. Stockholder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a Non-U.S. Stockholder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN (for individuals) or Form W-8BEN-E (for entities). In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Stockholder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. The Depositary will determine a Stockholder’s status as a Non-U.S. Stockholder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., IRS Forms W-8BEN, W-8BEN-E or W-8ECI) unless facts and circumstances indicate that such reliance is not warranted. A Non-U.S. Stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such Non-U.S. Stockholder satisfies certain requirements or is otherwise able to establish that no tax or a reduced amount of tax is due (See Section 7). Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Stockholders are urged to consult their own tax advisors regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

In addition, a Non-U.S. Stockholder (other than an individual) may be subject to a 30% withholding tax under Chapter 4 of the Internal Revenue Code of 1986, as amended (the “Code”), commonly referred to as “FATCA,” unless such Non-U.S. Stockholder establishes an exemption from such withholding tax under

FATCA, typically on IRS Form W-8BEN-E. If the Depositary withholds any amounts under FATCA, such amounts will be credited against any withholding due for U.S. federal income tax.

All questions as to the validity, form, eligibility (including time of receipt), payment and acceptance for payment of any tender of Shares will be determined by the Fund in its sole discretion, which determination shall be final and binding. The Fund reserves the absolute right to reject any and all tenders of Shares it determines not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in the tender of any Shares. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Fund, the Investment Manager, the Subadviser, the Information Agent, the Depositary or any other person shall be under any duty to give notification of any defects or irregularities in tenders, nor shall any of the foregoing incur any liability for failure to give any such notification. The Fund’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and instructions thereto) will be final and binding.

Payment for Shares tendered and accepted for payment pursuant to the Offer will be made, in all cases, only after timely receipt of (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) for such Shares and (ii) any other documents required by the Letter of Transmittal. The tender of Shares pursuant to any of the procedures described in this Section 3 will constitute an agreement between the tendering Stockholder and the Fund upon the terms and subject to the conditions of the Offer.

The method of delivery of all required documents is at the election and risk of each tendering Stockholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended.

4. Rights of Withdrawal. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Termination Date (June 30, 2022, unless extended).

To be effective, a written notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the last page of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who executed the particular Letter of Transmittal, the number of Shares to be withdrawn, and the names in which the Shares to be withdrawn are registered. Any signature on the notice of withdrawal must be guaranteed by an Eligible Institution.

All questions as to the form and validity, including time of receipt, of any notice of withdrawal will be determined by the Fund, in its sole discretion, which determination shall be final and binding. None of the Fund, the Investment Manager, the Subadviser, the Information Agent, the Depositary or any other person shall be under any duty to give notification of any defects or irregularities in any notice of withdrawal nor shall any of the foregoing incur any liability for failure to give such notification. Any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by following the procedures described in Section 3 of this Offer to Purchase at any time prior to the Termination Date.

If the Fund is delayed in its acceptance for payment of Shares, or it is unable to accept for payment Shares tendered pursuant to the Offer, for any reason, then, without prejudice to the Fund’s rights under this Offer, the Depositary may, on behalf of the Fund, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering Stockholders are entitled to withdrawal rights as set forth in this Section 4.

5. Source and Amount of Funds; Effect of the Offer. The actual cost of the Offer to the Fund cannot be determined at this time because the number of Shares to be purchased will depend on the number tendered, and the price will be based on the NAV per Share on the Termination Date (June 30, 2022, unless extended). If the NAV per Share on the Termination Date were the same as the NAV per Share on April 29, 2022, and if

Stockholders tender 3,701 Shares pursuant to the Offer, the estimated payment by the Fund to the Stockholders would be approximately $2,248,469. Based on the NAV per Share as of April 29, 2022, if the tender was fully subscribed, the Fund’s net assets after giving effect to the tender would be $87,713,359 and the number of outstanding Shares would be 144,377.

The Fund expects to fund the purchase of shares accepted for tender in the Offer through cash on hand and/or borrowings under its credit facility or sales of securities in the Fund’s investment portfolio.

On May 11, 2022, the Fund entered into a Master Margin Loan Agreement (the “Credit Agreement”) with The Bank of New York Mellon, as lender (“BNYM”). The Credit Agreement provides for borrowings in an aggregate principal amount of up to $35,000,000, subject to the terms and conditions therein. Each loan under the Credit Agreement constitutes an open commitment by BYNM terminable upon 180 days’ notice by the Fund or BNYM. The Fund has pledged as collateral to secure loans made under the Credit Agreement certain assets held by the Fund’s custodian. The Fund pays interest on borrowings calculated based on the Overnight Bank Funding Rate plus applicable margin. The Overnight Bank Funding Rate is a volume weighted median measure of U.S. dollar funding costs for U.S. based banks calculated using both fed funds transactions and O/N eurodollar time deposits. The Credit Agreement contains certain covenants, including a limitation on the incurrence of liens and a limitation on mergers and sales of assets. Other than in connection with the scheduled termination of the Fund,

anticipated to occur on December 30, 2022, the Fund does not have any current plans to finance or repay the Credit Agreement.

The offer may have certain adverse consequences for tendering and non-tendering Stockholders.

Effect on NAV and Consideration Received by Tendering Stockholders. If the Fund were required to sell a substantial amount of portfolio securities to raise cash to finance the Offer, the prices of portfolio securities being sold and/or the Fund’s remaining portfolio securities may decline and hence the NAV per Share may decline. If a decline occurs in the value of portfolio securities, the Fund cannot predict what its magnitude might be or whether such a decline would be temporary or continue to or beyond the Termination Date. Because the price per Share to be paid in the Offer will be dependent upon the NAV per Share as determined on the Termination Date, if such a decline continued up to the Termination Date (June 30, 2022, unless extended), the consideration received by tendering Stockholders would be reduced. In addition, the sale of portfolio securities will cause the Fund to incur increased brokerage and related transaction expenses, and the Fund may receive proceeds from the sale of portfolio securities that are less than their valuations by the Fund. Accordingly, obtaining the cash to consummate the Offer may result in a decrease in the Fund’s NAV per Share, thereby reducing the amount of proceeds received by tendering Stockholders and the NAV per Share for non-tendering Stockholders.

The Fund may sell portfolio securities during the pendency of the Offer to raise cash for the purchase of Shares. Thus, during the pendency of the Offer, and possibly for a short time thereafter, the Fund may hold a greater than normal percentage of its net assets in cash and cash equivalents. The Fund will pay for tendered Shares it accepts for payment promptly after the Termination Date of this Offer. Because the Fund will not know the number of Shares tendered until the Termination Date, the Fund will not know until the Termination Date the amount of cash required to pay for such Shares. If on or prior to the Termination Date, the Fund does not have, or believes it is unlikely to have, sufficient cash to pay for all Shares tendered, it may extend the Offer to allow additional time to sell portfolio securities and raise sufficient cash.

Recognition of Capital Gains by the Fund. As noted, the Fund may be required to sell portfolio securities to finance the Offer. If the Fund’s tax basis for the securities sold is less than the sale proceeds, the Fund will recognize capital gains. The Fund would expect to declare and distribute any such gains to Stockholders of record (reduced by net capital losses realized during the fiscal year, if any). In addition, some of the distributed gains may be realized on securities held for one year or less, which would generate income taxable to the non-tendering Stockholders at ordinary income rates. This recognition and distribution of gains, if any, would have certain negative consequences; first, Stockholders at the time of a declaration of distributions would be required to pay taxes on a greater amount of distributions than otherwise would be the case; second, to raise cash to make

the distributions, the Fund might need to sell additional portfolio securities thereby possibly being forced to realize and recognize additional capital gains. It is impossible to predict what the amount of unrealized gains or losses would be in the Fund’s portfolio at the time that the Fund is required to liquidate portfolio securities (and hence the amount of capital gains or losses that would be realized and recognized). As of April 29, 2022, the Fund had net unrealized depreciation of approximately $(6.6) million and deferred capital losses of approximately $(101.8) million.

Tax Consequences of Repurchases to Stockholders. The Fund’s purchase of tendered Shares pursuant to the Offer will have tax consequences for tendering Stockholders and may have tax consequences for non-tendering Stockholders. See Section 7 of this Offer to Purchase.

6. Purpose of the Offer; Plans or Proposals of the Fund. The Board of Directors of the Fund has authorized a tender offer to purchase for cash up to 2.5% of the Fund’s outstanding Shares, or up to 3,701 Shares, at a price per Share equal to the NAV per Share as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the NYSE on June 30, 2022 (or if the Offer is extended, on the date to which the Offer is extended), upon specified terms and subject to conditions of the Offer. Shares are not traded on any established trading market. In addition, in accordance with the rules promulgated by the SEC, the Fund may purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

The purpose of this Offer is to provide limited liquidity to Stockholders, as contemplated by and in accordance with the procedures set forth in the Prospectus. Because there is no secondary trading market for Shares, the Fund has determined, after consideration of various matters, including but not limited to those set forth in the Prospectus, that the Offer is in the best interests of Stockholders in order to provide limited liquidity for Shares as contemplated in the Prospectus. The Fund intends to consider the continued desirability of making an offer to purchase Shares on a quarterly basis, but the Fund is not required to make any such offer.

The purchase of Shares pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Stockholders that do not tender Shares. Stockholders that retain their Shares may be subject to increased risks due to a reduction in the Fund’s aggregate assets resulting from payment for the Shares tendered. These risks include the potential for greater volatility in our NAV due to possible decreased diversification. However, the Fund believes that this result is unlikely given the nature of the Fund’s investment program. A reduction in the aggregate assets of the Fund may result in Stockholders that do not tender Shares bearing higher costs to the extent that certain expenses borne by the Fund are relatively stable and may not decrease if assets decline.

Any Shares acquired by the Fund pursuant to the Offer will be retired and will have the status of unissued shares.

Other than in connection with the scheduled termination of the Fund, anticipated to occur on December 30, 2022, the Fund does not have any present plans or proposals and is not engaged in any negotiations that relate to or would result in: (a) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (b) other than in connection with transactions in the ordinary course of the Fund’s operations and for purposes of funding the Offer, any purchase, sale or transfer of a material amount of assets of the Fund or any of its subsidiaries; (c) any material change in the Fund’s present dividend policy, or indebtedness or capitalization of the Fund; (d) changes to the present Board of Directors or management of the Fund, including changes to the number or the term of members of the Board of Directors, the filling of any existing vacancies on the Board of Directors or changes to any material term of the employment contract of any executive officer; (e) any other material change in the Fund’s corporate structure or business, including any plans or proposals to make any changes in the Fund’s investment policy for which a vote would be required by Section 13 of the 1940 Act; (f) the suspension of the Fund’s obligation to file reports pursuant to Section 15(d) of the Exchange Act; (g) the acquisition by any person of additional securities of the Fund, or the disposition of securities of the Fund; or (h) any changes in the Fund’s Articles of Incorporation, By-Laws or other governing instruments or other actions that could impede the acquisition of control of the Fund.

NONE OF THE FUND, ITS BOARD OF DIRECTORS, THE INVESTMENT MANAGER OR THE SUBADVISER MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OF SUCH STOCKHOLDER’S SHARES, AND NONE OF SUCH PERSONS HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES.

7. Federal Income Tax Consequences of the Offer. The following discussion describes certain U.S. federal income tax consequences of tendering Shares in the Offer. Except where noted, it deals only with Shares held as capital assets and does not deal with special situations, such as those of dealers in securities or commodities, traders in securities that elect to mark their holdings to market, financial institutions, tax-exempt organizations, insurance companies, U.S. expatriates, persons liable for the alternative minimum tax, persons holding Shares as a part of a hedging, conversion or constructive sale transaction or a straddle or U.S. Stockholders whose functional currency is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. This summary does not address all aspects of U.S. federal income taxes and does not address the effects of the Medicare contribution tax on net investment income, special tax accounting rules that apply to certain accrual basis taxpayers under Section 451(b) of the Code or any foreign, state, local or other tax considerations that may be relevant to Stockholders in light of their particular circumstances. Stockholders should consult their own tax advisors concerning the U.S. federal income tax consequences of participating in the Offer in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.

If a partnership holds Shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Shares, you should consult your tax advisors.

As used herein, a U.S. Stockholder means a Stockholder that is (i) a citizen or individual resident of the U.S., (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S. or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust if it (x) is subject to the primary supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (y) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. A “Non-U.S. Stockholder” is a Stockholder that is neither a U.S. Stockholder nor a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes).

U.S. Stockholders. An exchange of Shares for cash in the Offer will be a taxable transaction for U.S. federal income tax purposes. As a consequence of the exchange, a tendering U.S. Stockholder will, depending on such Stockholder’s particular circumstances, be treated either as recognizing gain or loss from the disposition of the Shares or as receiving a dividend distribution from the Fund. Under Section 302(b) of the Code, a sale of Shares pursuant to the Offer generally will be treated as a sale or exchange if the receipt of cash by the Stockholder: (a) results in a complete termination of the Stockholder’s interest in the Fund, (b) results in a substantially disproportionate redemption with respect to the Stockholder, or (c) is not essentially equivalent to a dividend with respect to the Stockholder. In determining whether any of these tests has been met, Shares actually owned, as well as Shares considered to be owned by the Stockholder by reason of certain constructive ownership rules set forth in Section 318 of the Code, generally must be taken into account. The sale of Shares pursuant to the Offer generally will result in a “substantially disproportionate” redemption with respect to a Stockholder if the percentage of the Fund’s then outstanding voting stock owned by the Stockholder immediately after the sale is less than 80% of the percentage of the Fund’s voting stock owned by the Stockholder determined immediately before the sale. The sale of Shares pursuant to the Offer generally will be treated as “not essentially equivalent to a dividend” with respect to

a Stockholder if the reduction in the Stockholder’s proportionate interest in the Fund’s stock as a result of the Fund’s purchase of Shares constitutes a “meaningful reduction” of the Stockholder’s interest. If any of the above three tests for sale or exchange treatment is met, a U.S. Stockholder will recognize gain or loss equal to the difference between the price paid by the Fund for the Shares purchased in the Offer and the Stockholder’s adjusted basis in such Shares. If such Shares are held as a capital asset, the gain or loss will be capital gain or loss. The maximum tax rate applicable to capital gains recognized by individuals and other non-corporate taxpayers is (i) the same as the applicable ordinary income rate for capital assets held for one year or less or (ii) 20% for capital assets held for more than one year. The deductibility of capital losses is subject to limitations.

If the requirements of Section 302(b) of the Code are not met, amounts received by a Stockholder who sells Shares pursuant to the Offer will be taxable to the Stockholder as a dividend to the extent of such Stockholder’s allocable share of the Fund’s current or accumulated earnings and profits. To the extent that amounts received exceed such Stockholder’s allocable share of the Fund’s current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a non-taxable return of capital, causing a reduction in the adjusted basis of such Stockholder’s Shares and any amounts in excess of the Stockholder’s adjusted basis will constitute taxable gain. Any remaining adjusted basis in the Shares tendered to the Fund will be transferred to any remaining Shares held by such Stockholder.

If the payment for any purchase of Shares pursuant to the Offer is treated as a taxable dividend to the selling Stockholder rather than as an exchange, the other Stockholders, including the non-tendering Stockholders, could be deemed to have received taxable stock distributions under certain circumstances. Stockholders are urged to consult their own tax advisors regarding the possibility of deemed distributions resulting from the purchase of Shares pursuant to the Offer.

Non-U.S. Stockholders. The Depositary will withhold U.S. federal income taxes equal to 30% of the gross payments payable to a Non-U.S. Stockholder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a Non-U.S. Stockholder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN (for individuals) or Form W-8BEN-E (for entities). In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Stockholder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. The Depositary will determine a Stockholder’s status as a Non-U.S. Stockholder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., IRS Forms W-8BEN, W-8BEN-E or W-8ECI) unless facts and circumstances indicate that such reliance is not warranted. A Non-U.S. Stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such Non-U.S. Stockholder meets one of the “complete termination,” “substantially disproportionate” or “not essentially equivalent to a dividend” tests described above or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Stockholders are urged to consult their own tax advisors regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

In addition, a Non-U.S. Stockholder (other than an individual) may be subject to a 30% withholding tax under FATCA unless such Non-U.S. Stockholder establishes an exemption from such withholding tax under FATCA, typically on IRS Form W-8BEN-E. If the Depositary withholds any amounts under FATCA, such amounts will be credited against any withholding due for U.S. federal income tax.

Backup Withholding. See Section 3 with respect to the application of backup withholding on payments made to Stockholders.

The tax discussion set forth above is included for general information only. Each Stockholder is urged to consult his or her own tax advisor to determine the particular tax consequences to him or her of the Offer, including the applicability and effect of state, local and foreign tax laws.

8. Selected Financial Information. The audited financial statements of the Fund for the fiscal year ended April 30, 2021 appear in the Fund’s Annual Report to Stockholders for the period ended April 30, 2021 (the “Annual Report”). The Annual Report has previously been provided to Stockholders of the Fund and is incorporated by reference herein. The unaudited, semi-annual financial statements of the Fund for the period ended October 31, 2021 appear in the Fund’s Semi-Annual Report to Stockholders for the period ended October 31, 2021 (the “Semi-Annual Report”). The Semi-Annual Report has previously been provided to Stockholders of the Fund and is incorporated by reference herein. Copies of the Annual Report and the Semi-Annual Report can be obtained for free at the website of the Securities and Exchange Commission (the “SEC”) (http://www.sec.gov).

9. Certain Information Concerning the Fund, the Investment Manager and the Subadviser. The Fund is a closed-end, non-diversified management investment company organized as a Maryland corporation. The Fund commenced investment operations on August 26, 2014. Unlike most closed-end funds, the Fund’s Shares are not listed on a national securities exchange. Instead, the Fund expects to provide Stockholders with limited liquidity through tender offers for Shares. The Fund’s primary investment objective is to provide high income. As a secondary investment objective, the Fund seeks capital appreciation. The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its managed assets in securities, including loans, issued by middle market companies. For investment purposes, “middle market” refers to companies with annual revenues of between $100 million and $1 billion at the time of investment by the Fund. The principal executive offices and business address of the Fund are located at 620 Eighth Avenue, New York, New York 10018. The Fund’s business telephone number is 1-888-777-0102.

It is anticipated that the Fund will terminate on December 30, 2022. The Board of Directors may choose to terminate the Fund prior to the required termination date. If the Board of Directors of the Fund determines that under then current market conditions it is in the best interests of the Fund to do so, the Fund may extend the termination date for one year, to December 29, 2023, without a stockholder vote. The Fund’s termination date can be further extended beyond December 29, 2023 by an amendment to the Fund’s Articles of Incorporation approved by 75% of the directors and 75% of the outstanding voting securities of the Fund. Beginning one year before the termination date (the “wind-down period”), the Investment Manager and the Subadviser may begin liquidating all or a portion of the Fund’s portfolio through opportunistic sales. During the wind-down period the Fund may deviate from its investment strategy of investing at least 80% of its managed assets in securities, including loans, issued by middle market companies. Upon its termination, it is anticipated that the Fund will have distributed substantially all of its net assets to Stockholders, although securities for which no market exists or securities trading at depressed prices, if any, may be placed in a liquidating trust. Securities placed in a liquidating trust may be held for an indefinite period of time until they can be sold or have paid out all of their cash flows. The Fund’s investment objectives and policies are not designed to seek to return to investors that purchase Shares their initial investment on the termination date of the Fund, and such investors may receive more or less than their original investment upon termination of the Fund.

The Investment Manager, an indirect wholly-owned subsidiary of Franklin Resources is a limited liability company organized under the laws of Delaware on April 6, 2006 and an investment adviser registered under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Investment Manager has served as investment manager since the commencement of operations. The principal business address of the Investment Manager is 620 Eighth Avenue, New York, New York, 10018. The Fund is sub-advised by Western Asset Management Company, LLC, an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Franklin Resources.

The Fund is subject to the information and reporting requirements of the 1940 Act and in accordance therewith is obligated to file reports and other information with the SEC relating to its business, financial

condition and other matters. The Fund has also filed an Offer to Purchase on Schedule TO with the SEC. Such reports and other information should be available for inspection at the public reference room at the SEC’s office, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The Fund’s filings are also available to the public on the SEC’s internet site (http://www.sec.gov). Copies may be obtained, by mail, upon payment of the SEC’s customary charges, by writing to its Public Reference Section at 100 F Street, N.E., Washington, D.C. 20549.

10. Interests of Directors, Executive Officers and Associates; Transactions and Arrangements Concerning the Shares. The directors and executive officers of the Fund and the aggregate number and percentage of the Shares each of them beneficially owns as of April 29, 2022 is set forth in the table below. The business address and business telephone number of each of them are in care of the Fund at 620 Eighth Avenue, New York, New York 10018 and 1-888-777-0102, respectively. The aggregate number and percentage of the Shares owned beneficially by Legg Mason, the Investment Manager and the Subadviser as of April 29, 2022 are set forth in the table below. The principal business address of Legg Mason is 100 International Drive, Baltimore, Maryland 21202. The principal business address of the Investment Manager is 620 Eighth Avenue, New York, New York 10018. The principal business address of the Subadviser is 385 East Colorado Boulevard, Pasadena, California 91101.


Name and Position	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
Non-Interested Directors:
Robert D. Agdern		None		None
Director and Member of the Audit and Nominating Committees
Carol L. Colman		None		None
Director and Member of the Audit and Nominating Committees
Daniel P. Cronin		None		None
Director and Member of the Audit and Nominating Committees
Paolo M. Cucchi		None		None
Director and Member of the Audit and Nominating Committees
William R. Hutchinson		None		None
Director and Member of the Audit and Nominating Committees
Eileen A. Kamerick		None		None
Director and Member of the Audit and Nominating Committees
Nisha Kumar		None		None
Director and Member of the Audit and Nominating Committees

Interested Director:
Jane E. Trust		None		None
Director, Chairman, President and Chief Executive Officer

Officers:
Jane E. Trust		None		None
Director, Chairman, President and Chief Executive Officer
Christopher Berarducci		None		None
Treasurer and Principal Financial Officer
Fred Jensen		None		None
Chief Compliance Officer
George P. Hoyt		None		None
Secretary and Chief Legal Officer
Thomas C. Mandia		None		None
Senior Vice President
Jeanne M. Kelly		None		None
Senior Vice President


Name and Position	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned

Associates:
Legg Mason **		100		*
Investment Manager		None		None
Subadviser		None		None

Less than 1%.

Legg Mason is a wholly owned subsidiary of Franklin Resources.

Neither the Fund nor, to the best of the Fund’s knowledge, any of the Fund’s officers or directors, any person controlling the Fund, or any executive officer or director of any corporation or other person ultimately in control of the Fund, has effected any transaction in Shares during the past 60 days.

Other than as set forth in the Offer, neither the Fund nor, to the best of the Fund’s knowledge, any of the Fund’s officers or directors is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly to the Offer with respect to any securities of the Fund, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

The Fund has been advised that no director or officer of the Fund intends to tender Shares, except that Legg Mason reserves the right to tender Shares pursuant to the Offer. See Section 6 of this Offer to Purchase.

11. Certain Legal Matters; Regulatory Approvals. The Fund is not aware of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Fund as contemplated herein. Should any such approval or other action be required, the Fund currently contemplates that such approval or other action will be sought. The Fund is unable to predict whether it may determine that it is required to delay the acceptance for payment of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Fund’s business. The Fund’s obligations under the Offer to accept for payment and pay for Shares are subject to certain conditions described in Section 12.

12. Certain Conditions to the Offer. Notwithstanding any other provision of the Offer, the Fund will not commence the Offer or accept tenders of the Fund’s Shares during any period when (a) such transactions, if consummated, would impair the Fund’s status as a regulated investment company under the Code (which would make the Fund a taxable entity, causing the Fund’s income to be taxed at the fund level in addition to the taxation of Stockholders who receive distributions from the Fund); (b) the Fund would not be able to liquidate portfolio securities in a manner that is orderly and consistent with the Fund’s investment objectives and policies in order to purchase Shares tendered pursuant to the Offer; (c) there is any (i) legal or regulatory action or proceeding instituted or threatened challenging such transaction or otherwise materially affecting the Fund, (ii) declaration of a banking moratorium by federal or state authorities or any suspension of payment by banks in the United States or New York State, which is material to the Fund, (iii) limitation affecting the Fund imposed by federal or state authorities on the extension of credit by lending institutions, (iv) commencement of war, armed hostilities, acts of terrorism or other international or national calamity directly or indirectly involving the United States that in the sole determination of the Board of Directors is material to the Fund, or (v) any other event which, in the judgment of the Board of Directors, would have a material adverse effect on the Fund or its Stockholders if the Offer was consummated; or (d) the Board of Directors of the Fund determines in good faith that effecting any such transaction would constitute a breach of its fiduciary duty owed to the Fund or its Stockholders. The Fund

will commence the Offer if it is delayed by the pendency of any of the above described events within 30 days of the termination of such delaying event, as determined by the Fund in its sole discretion.

The foregoing conditions are for the sole benefit of the Fund and may be asserted by the Fund regardless of the circumstances (including any action or inaction by the Fund) giving rise to any such conditions or may be waived by the Fund in whole or in part at any time and from time to time in its sole discretion. The failure by the Fund at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Fund concerning the events described in this Section shall be final and binding on all parties.

Notification shall be provided of a material change in, or waiver of, such conditions, and the Offer may, in certain circumstances, be extended in connection with any such change or waiver.

If the Offer is suspended or postponed, the Fund will provide notice to Stockholders of such suspension or postponement.

13. Fees and Expenses. The Fund will not pay to any broker or dealer, commercial bank, trust company or other person any solicitation fee for any Shares purchased pursuant to the Offer. The Fund will reimburse such persons for customary handling and mailing expenses incurred in forwarding the Offer. No such broker, dealer, commercial bank, trust company or other person has been authorized to act as agent of the Fund or the Depositary for purposes of the Offer.

The Fund has retained Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A., to act as Depositary. The Depositary and the Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out of pocket expenses, and will be indemnified against certain liabilities by the Fund.

14. Miscellaneous. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. The Fund may, in its sole discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction.

The Fund is not aware of any jurisdiction in which the making of the Offer or the acceptance of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. Consequently, the Offer is currently being made to all holders of Shares. However, the Fund reserves the right to exclude Stockholders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. So long as the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer, the Fund believes that the exclusion of Stockholders residing in such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act.

15. Contacting the Depositary and the Information Agent. The Letter of Transmittal and any other required documents should be sent by each Stockholder of the Fund to the Depositary as set forth on the back cover page of this Offer to Purchase.

The Depositary for the Offer is:

Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A.


By First Class Mail:		By Registered, Certified, or Express Mail, or Overnight Courier:

Computershare		Computershare
c/o Voluntary Corporate Actions		c/o Voluntary Corporate Actions
PO Box 43011		150 Royall St, Suite V
Providence, RI 02940-3011		Canton, MA 02021

Any questions or requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal and other documents may be directed to the Information Agent at its telephone number and location listed below.

The Information Agent for the Offer is:

Georgeson LLC

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Shareholders, Banks and Brokers may call toll free: (866) 431-2110

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

JUNE 1, 2022

EX-99.(A)(1)(II) 3 d293633dex99a1ii.htm EX-99.(A)(1)(II) EX-99.(a)(1)(ii)

Exhibit (a)(1)(ii)

LETTER OF TRANSMITTAL

To Accompany Shares of Common Stock

or Order Tender of Uncertificated Shares of

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

Tendered Pursuant to the Offer

Dated June 1, 2022

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,

NEW YORK CITY TIME, ON JUNE 30, 2022, UNLESS THE OFFER IS

EXTENDED.

The Depositary for the Offer is:

Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A.


By First Class Mail:		By Registered, Certified, or Express Mail, or Overnight Courier:

Computershare		Computershare
c/o Voluntary Corporate Actions		c/o Voluntary Corporate Actions
PO Box 43011		150 Royall St, Suite V
Providence, RI 02940-3011		Canton, MA 02021

DESCRIPTION OF SHARES TENDERED


Name(s), Account Number(s) and Addresses of Registered Holder(s): (Please Fill in, if Blank, Exactly as Name(s) Appear(s) on Account Registration)	Number of Shares Tendered (Attach Additional Signed Schedule if necessary)



		Total
		Shares
		Tendered

CORPORATE ACTIONS VOLUNTARY COY XWMF

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND EXCEPT AS OTHERWISE PROVIDED IN INSTRUCTION 2, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE STOCKHOLDER HAS THE RESPONSIBILITY TO CAUSE THE LETTER OF TRANSMITTAL AND ANY OTHER DOCUMENTS TO BE TIMELY DELIVERED.

NOTE: SIGNATURES MUST BE PROVIDED BELOW.

PLEASE READ THE ACCOMPANYING DOCUMENTS CAREFULLY.

CORPORATE ACTIONS VOLUNTARY COY XWMF

Ladies and Gentlemen:

The undersigned hereby tenders to Western Asset Middle Market Income Fund Inc., a Maryland corporation (the “Fund”), the shares of the Fund’s Common Stock, $.001 par value per share (the “Shares”) described below, at a price per Share (the “Purchase Price”) equal to the net asset value per Share as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the New York Stock Exchange (“NYSE”) on June 30, 2022 (or if the Offer is extended, on the date to which the Offer is extended), upon the terms and subject to the conditions set forth in the Fund’s Offer to Purchase, dated June 1, 2022, receipt of which is hereby acknowledged, and this Letter of Transmittal (which, together with the Fund’s Offer to Purchase, constitute the “Offer”). The “Termination Date” of the Offer is 5:00 p.m., New York City time, on June 30, 2022. If the Fund, in its sole discretion, shall have extended the period for which the Offer is open, the “Termination Date” shall mean the latest time and date on which the Offer, as so extended by the Fund, shall expire.

Subject to, and effective upon, acceptance of payment for the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Fund all right, title and interest in and to all the Shares that are being tendered hereby and that are being accepted for purchase pursuant to the Offer and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) transfer ownership of such Shares on the account books maintained by the Fund’s transfer agent, together, in either such case, with all accompanying evidences of transfer and authenticity to or upon the order of the Fund, upon receipt by the Depositary, as the undersigned’s agent, of the Purchase Price, (b) present such Shares for transfer on the books of the Fund, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer.

The undersigned hereby represents and warrants that, (a) the undersigned has full power and authority to tender, sell, assign and transfer the tendered Shares (and any and all dividends, distributions, other Shares or other securities or rights issued or issuable in respect of such Shares on or after the Termination Date); (b) when and to the extent the Fund accepts the Shares for purchase, the Fund will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, proxies, encumbrances or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents deemed by the Depositary or the Fund to be necessary or desirable to complete the sale, assignment and transfer of the tendered Shares (and any and all dividends, distributions, other Shares or securities or rights issued or issuable in respect of such Shares on or after the Termination Date); and (d) the undersigned has read and agreed to all of the terms of the Offer.

All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Termination Date in accordance with Section 4, “Rights of Withdrawal,” of the Fund’s Offer to Purchase. After the Termination Date, tenders made pursuant to the Fund’s Offer to Purchase will be irrevocable.

CORPORATE ACTIONS VOLUNTARY COY XWMF

SIGN HERE

(IMPORTANT: COMPLETE AND SIGN THE FORM W-9 HEREIN OR

APPLICABLE FORM W-8)

(Signature (s) of Stockholder(s))

Dated: ,

(Must be signed by the registered holder(s) exactly as name(s) appear(s) on account registration) for the Shares or on a security position listing or by person(s) authorized to become registered holder(s) by documents transmitted herewith. If signature is by attorney-in-fact, executor, administrator, trustee, guardian, agent, officer of a corporation or another person acting in a fiduciary or representative capacity, please provide the following information. See instruction 6.)

Name(s)

(Please Print)

Capacity (Full Title)

Address


City		State		Zip Code

Area Code and Telephone Number

Employer identification or Social Security Number

GUARANTEE OF SIGNATURE(S)

(See Instructions 1 and 6)

Authorized Signature(s)

(Please Print)

Name of Firm

Address

City

State

Zip Code

Dated: ,

CORPORATE ACTIONS VOLUNTARY COY XWMF

INSTRUCTIONS

Forming Part of the Terms and Conditions of the Offer

1. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder of the Shares tendered herewith, or (ii) if such Shares are tendered for the account of a firm which is a broker, dealer, commercial bank, credit union, savings association or other entity and which is a member in good standing of a stock transfer association’s approved medallion program (such as STAMP, SEMP or MSP) (each being hereinafter referred to as an “Eligible Institution”). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 6.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE STOCKHOLDER HAS THE RESPONSIBILITY TO CAUSE THE LETTER OF TRANSMITTAL AND ANY OTHER DOCUMENTS TO BE TIMELY DELIVERED.

No alternative, conditional or contingent tenders will be accepted, except as may be permitted in the Fund’s Offer to Purchase. All stockholders of the Fund (“Stockholders”) who are tendering their Shares, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of the acceptance for payment of Shares.

2. Signatures on Letter of Transmittal; Stock Powers and Endorsements.

(a) If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) on the face of the account registration.

(b) If any of the tendered Shares are held of record by two or more joint holders, ALL such holders must sign this Letter of Transmittal.

(c) If this Letter of Transmittal or any stock powers are signed by trustees, executors, administrators, guardians, agents, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Fund of their authority to so act.

3. Tender of More Than 3,701 Shares. If more than 3,701 Shares are duly tendered prior to the expiration of the Offer (and not properly withdrawn), the Fund will purchase Shares from tendering Stockholders, in accordance with the terms and conditions specified in the Offer to Purchase and herein, by first purchasing shares tendered by any stockholders who own, beneficially or of record, an aggregate amount of 10 shares or less (an “odd lot”) and tender all of their shares. The Fund will then purchase any remaining shares that have been duly tendered on a pro rata basis (disregarding fractions), in accordance with the number of Shares duly tendered by each Stockholder during the period the Offer is open (and not properly withdrawn), unless the Fund determines not to purchase any Shares.

4. Irregularities. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Fund, in its sole discretion, which determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders of any particular Shares (i) determined by it not to be in proper form or (ii) the acceptance of or payment for which may in the opinion of the Fund’s counsel, be unlawful. The Fund also reserves the absolute right to waive any of the

CORPORATE ACTIONS VOLUNTARY COY XWMF

conditions of the Offer, in whole or in part, or any defect or irregularity in tender of any particular Shares or Stockholder, and the Fund’s interpretations of the terms and conditions of the Offer (including these instructions) shall be final and binding. No tender of Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. None of the Fund, the Depositary, the Information Agent (as defined below) or any other person shall be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. Unless waived, any defects or irregularities must be cured within such time as the Fund shall determine.

5. Requests for Assistance and Additional Copies. Requests for assistance should be directed to, and additional copies of the Fund’s Offer to Purchase and this Letter of Transmittal may be obtained from, the Information Agent at the address set forth at the end of this Letter of Transmittal. The Information Agent will also provide Stockholders, upon request, with a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (W-8BEN), a Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) (W-8BEN-E) or a Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States (W-8ECI).

6. Backup Withholding. Each Stockholder that desires to participate in the Offer must, unless an exemption applies, provide the Depositary with the Stockholder’s taxpayer identification number on the Internal Revenue Service (“IRS”) Form W-9 set forth in this Letter of Transmittal with the required certifications being made under penalties of perjury. If the Stockholder is an individual, the taxpayer identification number is his or her social security number. If the Depositary is not provided with the correct taxpayer identification number, the Stockholder may be subject to a $50 penalty imposed by the IRS in addition to being subject to backup withholding.

Stockholders are required to give the Depositary the taxpayer identification number of the record owner of the Shares by completing the IRS Form W-9 included with this Letter of Transmittal. If the Shares are registered in more than one name or are not in the name of the actual owner, consult the instructions to the Form W-9 for guidance on which number to provide.

If backup withholding applies, the Depositary is required to withhold 24% of any payment made to the Stockholder with respect to Shares purchased pursuant to the Offer. Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding may result in an overpayment of taxes for which a refund may be obtained by the Stockholder from the IRS.

Certain Stockholders (including, among others, most corporations and certain foreign persons) are exempt from backup withholding requirements. To qualify as an exempt recipient on the basis of foreign status, a Stockholder must submit a properly completed IRS Form W-8 (generally, a Form W-8BEN, W-8BEN-E or Form W-8ECI), signed under penalties of perjury, attesting to that person’s exempt status. A Stockholder would use a Form W-8BEN (for individuals) or Form W-8BEN-E (for entities) to certify that (1) it is the beneficial owner (or is authorized to sign for the beneficial owner) of all the income to which the form relates, (2) the beneficial owner is not a U.S. person, (3) the income to which the form relates is (a) not effectively connected with the conduct of a trade or business in the United States, (b) effectively connected but is not subject to tax under an income tax treaty, or (c) the partner’s share of a partnership’s effectively connected income, and (4) for broker transactions or barter exchanges, the beneficial owner is an exempt foreign person; and would use a Form W-8ECI to certify that (1) it is the beneficial owner (or is authorized to sign for the beneficial owner) of all the income to which the form relates, (2) the amounts for which the certification is provided are effectively connected with the conduct of a trade or business in the United States and are includible in its gross income (or the beneficial owner’s gross income) for the taxable year, and (3) the beneficial owner is not a U.S. person. A foreign Stockholder may also use a Form W-8BEN or Form W-8BEN-E to certify that it is eligible for benefits under a tax treaty between the United States and such foreign person’s country of residence.

CORPORATE ACTIONS VOLUNTARY COY XWMF

A STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO HIS OR HER QUALIFICATION FOR EXEMPTION FROM THE BACKUP WITHHOLDING REQUIREMENTS AND THE PROCEDURE FOR OBTAINING AN EXEMPTION.

7. Withholding for Non-U.S. Stockholders. Even if a Non-U.S. Stockholder (as defined in Section 7 of the Fund’s Offer to Purchase) has provided the required certification to avoid backup withholding, the Depositary will withhold U.S. federal income taxes equal to 30% of the gross payments payable to a Non-U.S. Stockholder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a Non-U.S. Stockholder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN (for individuals) or Form W-8BEN-E (for entities). In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Stockholder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. The Depositary will determine a shareowner’s status as a Non-U.S. Stockholder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., IRS Forms W-8BEN, W-8BEN-E or W-8ECI) unless facts and circumstances indicate that such reliance is not warranted. A Non-U.S. Stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such shareowner satisfies certain requirements or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Stockholders are urged to consult their own tax advisors regarding the application of federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

In addition, a Non-U.S. Stockholder (other than an individual) may be subject to a 30% withholding tax under Chapter 4 of the Internal Revenue Code of 1986, as amended, commonly referred to as “FATCA,” unless such Non-U.S. Stockholder establishes an exemption from such withholding tax under FATCA, typically on IRS Form W-8BEN-E. If the Depositary withholds any amounts under FATCA, such amounts will be credited against any withholding due for U.S. federal income tax.

8. Stock Transfer Taxes. Except as set forth in this Instruction 8, no stock transfer tax stamps or funds to cover such stamps need accompany this Letter of Transmittal, and the Fund will pay all stock transfer taxes, if any, with respect to the transfer and sale of Shares to it pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted by the Fund’s Offer to Purchase) if Shares not tendered or not purchased are to be registered in the name of any person other than the registered holder, or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted.

CORPORATE ACTIONS VOLUNTARY COY XWMF

Form W-9

(Rev. October 2018)

Department of the Treasury

Internal Revenue Service

Request for Taxpayer

Identification Number and Certification

u Go to www.irs.gov/FormW9 for instructions and the latest information.

Give Form to the requester. Do not
send to the IRS.

Print or type

See

Specific Instructions

on page 3.

1 Name (as shown on your income tax return). Name is required on this line; do not leave this line blank.

2 Business name/disregarded entity name, if different from above

3 Check appropriate box for federal tax classification of the person whose name is entered on line 1. Check only one of the following seven boxes.

4 Exemptions (codes apply only to certain entities, not individuals; see instructions on page 3):

☐

Individual/sole proprietor or
single-member LLC

☐

C Corporation

☐

S Corporation

☐

Partnership

☐

Trust/estate

Exempt payee code (if any)

☐

Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=Partnership) u

Note: Check the appropriate box in the line above for the tax classification of the single-member owner. Do not check LLC if the LLC is classified as a single-member LLC that is disregarded from the owner unless the owner of the LLC is another LLC that is not disregarded from the owner for U.S. federal tax purposes. Otherwise, a single-member LLC that is disregarded from the owner should check the appropriate box for the tax classification of its owner.

Exemption from FATCA reporting code (if any)

☐

Other (see instructions) u

(Applies to accounts maintained outside the U.S.)

5 Address (number, street, and apt. or suite no.) See instructions.

Requester’s name and address (optional)

6 City, state, and ZIP code

7 List account number(s) here (optional)


Part I		Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the instructions for Part I, later. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN, later.

Note: If the account is in more than one name, see the instructions for line 1. Also see What Name and Number To Give the Requester for guidelines on whose number to enter.

Social security number

–

Employer identification number

–


Part II		Certification

Under penalties of perjury, I certify that:

The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

I am a U.S. citizen or other U.S. person (defined below); and

The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions for Part II, later.


Sign Here		Signature of U.S. person u		Date u

General Instructions

Section references are to the Internal Revenue Code unless otherwise noted.

Future developments. For the latest information about developments related to Form W-9 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/FormW9.


		Cat. No. 10231X		Form W-9 (Rev. 10-2018)


Form W-9 (Rev. 10-2018)		Page 2

Purpose of Form

An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which may be your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following.

● Form 1099-INT (interest earned or paid)

● Form 1099-DIV (dividends, including those from stocks or mutual funds)

● Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)

● Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)

● Form 1099-S (proceeds from real estate transactions)

● Form 1099-K (merchant card and third party network transactions)

● Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition)

● Form 1099-C (canceled debt)

● Form 1099-A (acquisition or abandonment of secured property)

Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN.

If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding. See What is backup withholding, later.

By signing the filled-out form, you:

1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued),

2. Certify that you are not subject to backup withholding, or

3. Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S. person, your allocable share of any partnership income from a U.S. trade or business is not subject to the withholding tax on foreign partners’ share of effectively connected income, and

4. Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct. See What is FATCA reporting, later, for further information.

Note: If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requester’s form if it is substantially similar to this Form W-9.

Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are:

● An individual who is a U.S. citizen or U.S. resident alien;

● A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States;

● An estate (other than a foreign estate); or

● A domestic trust (as defined in Regulations section 301.7701-7).

Special rules for partnerships. Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax under section 1446 on any foreign partners’ share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received, the rules under section 1446 require a partnership to presume that a partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your U.S. status and avoid section 1446 withholding on your share of partnership income.

In the cases below, the following person must give Form W-9 to the partnership for purposes of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States.

● In the case of a disregarded entity with a U.S. owner, the U.S. owner of the disregarded entity and not the entity;

● In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally, the U.S. grantor or other U.S. owner of the grantor trust and not the trust; and

● In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than a grantor trust) and not the beneficiaries of the trust.

Foreign person. If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).

Nonresident alien who becomes a resident alien. Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the payee has otherwise become a U.S. resident alien for tax purposes.


Form W-9 (Rev. 10-2018)		Page 3

If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items.

1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.

2. The treaty article addressing the income.

3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.

4. The type and amount of income that qualifies for the exemption from tax.

5. Sufficient facts to justify the exemption from tax under the terms of the treaty article.

Example. Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Form W-9 a statement that includes the information described above to support that exemption.

If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.

Backup Withholding

What is backup withholding? Persons making certain payments to you must under certain conditions withhold and pay to the IRS 24% of such payments. This is called “backup withholding.” Payments that may be subject to backup withholding include interest, tax-exempt interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding.

You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return.

Payments you receive will be subject to backup withholding if:

1. You do not furnish your TIN to the requester,

2. You do not certify your TIN when required (see the instructions for Part II for details),

3. The IRS tells the requester that you furnished an incorrect TIN,

4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or

5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backup withholding. See Exempt payee code, later, and the separate Instructions for the Requester of Form W-9 for more information.

Also see Special rules for partnerships, earlier.

What is FATCA Reporting?

The Foreign Account Tax Compliance Act (FATCA) requires a participating foreign financial institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See Exemption from FATCA reporting code, later, and the Instructions for the Requester of Form W-9 for more information.

Updating Your Information

You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving reportable payments in the future from this person. For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt. In addition, you must furnish a new Form W-9 if the name or TIN changes for the account; for example, if the grantor of a grantor trust dies.

Penalties

Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

Misuse of TINs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.


Form W-9 (Rev. 10-2018)		Page 4

Specific Instructions

Line 1

You must enter one of the following on this line; do not leave this line blank. The name should match the name on your tax return.

If this Form W-9 is for a joint account (other than an account maintained by a foreign financial institution (FFI)), list first, and then circle, the name of the person or entity whose number you entered in Part I of Form W-9. If you are providing Form W-9 to an FFI to document a joint account, each holder of the account that is a U.S. person must provide a Form W-9.

a. Individual. Generally, enter the name shown on your tax return. If you have changed your last name without informing the Social Security Administration (SSA) of the name change, enter your first name, the last name as shown on your social security card, and your new last name.

Note: ITIN applicant: Enter your individual name as it was entered on your Form W-7 application, line 1a. This should also be the same as the name you entered on the Form 1040/1040A/1040EZ you filed with your application.

b. Sole proprietor or single-member LLC. Enter your individual name as shown on your 1040/1040A/1040EZ on line 1. You may enter your business, trade, or “doing business as” (DBA) name on line 2.

c. Partnership, LLC that is not a single-member LLC, C corporation, or S corporation. Enter the entity’s name as shown on the entity’s tax return on line 1 and any business, trade, or DBA name on line 2.

d. Other entities. Enter your name as shown on required U.S. federal tax documents on line 1. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on line 2.

e. Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a “disregarded entity.” See Regulations section 301.7701-2(c)(2)(iii). Enter the owner’s name on line 1. The name of the entity entered on line 1 should never be a disregarded entity. The name on line 1 should be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S. person, the U.S. owner’s name is required to be provided on line 1. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity’s name on line 2, “Business name/disregarded entity name.” If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign person has a U.S. TIN.

Line 2

If you have a business name, trade name, DBA name, or disregarded entity name, you may enter it on line 2.

Line 3

Check the appropriate box on line 3 for the U.S. federal tax classification of the person whose name is entered on line 1. Check only one box on line 3.


		IF the entity/person on line 1 is a(n)...		THEN check the box for...
		• Corporation		Corporation
		• Individual • Sole proprietorship, or • Single-member limited liability company (LLC) owned by an individual and disregarded for U.S. federal tax purposes.		Individual/sole proprietor or single-member LLC
		• LLC treated as a partnership for U.S. federal tax purposes, • LLC that has filed Form 8832 or 2553 to be taxed as a corporation, or • LLC that is disregarded as an entity separate from its owner but the owner is another LLC that is not disregarded for U.S. federal tax purposes.		Limited liability company and enter the appropriate tax classification. (P= Partnership; C= C corporation; or S= S corporation)
		• Partnership		Partnership
		• Trust/estate		Trust/estate

Line 4, Exemptions

If you are exempt from backup withholding and/or FATCA reporting, enter in the appropriate space on line 4 any code(s) that may apply to you.

Exempt payee code.

• Generally, individuals (including sole proprietors) are not exempt from backup withholding.

• Except as provided below, corporations are exempt from backup withholding for certain payments, including interest and dividends.

• Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions.

• Corporations are not exempt from backup withholding with respect to attorneys’ fees or gross proceeds paid to attorneys, and corporations that provide medical or health care services are not exempt with respect to payments reportable on Form 1099-MISC.

The following codes identify payees that are exempt from backup withholding. Enter the appropriate code in the space in line 4.


Form W-9 (Rev. 10-2018)		Page 5

1—An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2)

2—The United States or any of its agencies or instrumentalities

3—A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities

4—A foreign government or any of its political subdivisions, agencies, or instrumentalities

5—A corporation

6—A dealer in securities or commodities required to register in the United States, the District of Columbia, or a U.S. commonwealth or possession

7—A futures commission merchant registered with the Commodity Futures Trading Commission

8—A real estate investment trust

9—An entity registered at all times during the tax year under the Investment Company Act of 1940

10—A common trust fund operated by a bank under section 584(a)

11—A financial institution

12—A middleman known in the investment community as a nominee or custodian

13—A trust exempt from tax under section 664 or described in section 4947

The following chart shows types of payments that may be exempt from backup withholding. The chart applies to the exempt payees listed above, 1 through 13.


IF the payment is for...		THEN the payment is exempt for…
Interest and dividend payments		All exempt payees except for 7
Broker transactions		Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt only for sales of noncovered securities acquired prior to 2012.
Barter exchange transactions and patronage dividends		Exempt payees 1 through 4
Payments over $600 required to be reported and direct sales over $5,000¹		Generally, exempt payees 1 through 5²
Payments made in settlement of payment card or third party network transactions		Exempt payees 1 through 4

¹	See Form 1099-MISC, Miscellaneous Income, and its instructions.

However, the following payments made to a corporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys’ fees, gross proceeds paid to an attorney reportable under section 6045(f), and payments for services paid by a federal executive agency.

Exemption from FATCA reporting code. The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank. Consult with the person requesting this form if you are uncertain if the financial institution is subject to these requirements. A requester may indicate that a code is not required by providing you with a Form W-9 with “Not Applicable” (or any similar indication) written or printed on the line for a FATCA exemption code.

A—An organization exempt from tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37)

B—The United States or any of its agencies or instrumentalities

C—A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities

D—A corporation the stock of which is regularly traded on one or more established securities markets, as described in Regulations section 1.1472-1(c)(1)(i)

E—A corporation that is a member of the same expanded affiliated group as a corporation described in Regulations section 1.1472-1(c)(1)(i)

F—A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state

G—A real estate investment trust

H—A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940

I—A common trust fund as defined in section 584(a)

J—A bank as defined in section 581

K—A broker

L—A trust exempt from tax under section 664 or described in
section 4947(a)(1)

M—A tax exempt trust under a section 403(b) plan or section 457(g) plan


Form W-9 (Rev. 10-2018)		Page 6

Note: You may wish to consult with the financial institution requesting this form to determine whether the FATCA code and/or exempt payee code should be completed.

Line 5

Enter your address (number, street, and apartment or suite number). This is where the requester of this Form W-9 will mail your information returns. If this address differs from the one the requester already has on file, write NEW at the top. If a new address is provided, there is still a chance the old address will be used until the payor changes your address in their records.

Line 6

Enter your city, state, and ZIP code.

Part I. Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see How to get a TIN below.

If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN.

If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN.

Note: See What Name and Number To Give the Requester, later, for further clarification of name and TIN combinations.

How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5, Application for a Social Security Card, from your local SSA office or get this form online at www.SSA.gov. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/Businesses and clicking on Employer Identification Number (EIN) under Starting a Business. Go to www.irs.gov/Forms to view, download, or print Form W-7 and/or Form SS-4. Or, you can go to www.irs.gov/OrderForms to place an order and have Form W-7 and/or SS-4 mailed to you within 10 business days.

If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write “Applied For” in the space for the TIN, sign and date the form, and give it to the

requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester.

Note: Entering “Applied For” means that you have already applied for a TIN or that you intend to apply for one soon.

Caution: A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8.

Part II. Certification

To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if item 1, 4, or 5 below indicates otherwise.

For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case of a disregarded entity, the person identified on line 1 must sign. Exempt payees, see Exempt payee code, earlier.

Signature requirements. Complete the certification as indicated in items 1 through 5 below.

1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983. You must give your correct TIN, but you do not have to sign the certification.

2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form.

3. Real estate transactions. You must sign the certification. You may cross out item 2 of the certification.

4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. “Other payments” include payments made in the course of the requester’s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).

5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529),


Form W-9 (Rev. 10-2018)		Page 7

ABLE accounts (under section 529A), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification.

What Name and Number To Give the Requester


For this type of account:		Give name and SSN of:
1. Individual		The individual

2. Two or more individuals (joint account) other than an account maintained by an FFI		The actual owner of the account or, if combined funds, the first individual on the account¹

3. Two or more U.S. persons (joint account maintained by an FFI)		Each holder of the account

4. Custodial account of a minor (Uniform Gift to Minors Act)		The minor²

5. a. The usual revocable savings trust (grantor is also trustee)		The grantor-trustee¹

b.So-called trust account that is not a legal or valid trust under state law		The actual owner¹

6. Sole proprietorship or disregarded entity owned by an individual		The owner³

7. Grantor trust filing under Optional Form 1099 Filing Method 1 (see Regulations section 1.671-4(b)(2)(i) (A))		The grantor*

For this type of account:		Give name and EIN of:
8. Disregarded entity not owned by an individual		The owner

9. A valid trust, estate, or pension trust		Legal entity⁴

10. Corporation or LLC electing corporate status on Form 8832 or Form 2553		The corporation

11. Association, club, religious, charitable, educational, or other tax-exempt organization		The organization

12. Partnership or multi-member LLC		The partnership

13. A broker or registered nominee		The broker or nominee



For this type of account:		Give name and EIN of:

14. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments		The public entity

15. Grantor trust filing under the Form 1041 Filing Method or the Optional Form 1099 Filing Method 2 (see Regulations section 1.671-4(b)(2)(i)(B))		The trust

¹	List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.

²	Circle the minor’s name and furnish the minor’s SSN.

³	You must show your individual name and you may also enter your business or DBA name on the “Business name/disregarded entity” name line. You may use either your SSN or EIN (if you have one), but the IRS encourages you to use your SSN.

⁴	List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Also see Special rules for partnerships, earlier.

*	Note: The grantor also must provide a Form W-9 to trustee of trust.

Note: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Secure Your Tax Records From Identity Theft

Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund.

To reduce your risk:

•

Protect your SSN,

•

Ensure your employer is protecting your SSN, and

•

Be careful when choosing a tax preparer.

If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter.


Form W-9 (Rev. 10-2018)		Page 8

If your tax records are not currently affected by identity theft but you think you are at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039.

For more information, see Pub. 5027, Identity Theft Information for Taxpayers.

Victims of identity theft who are experiencing economic harm or a systemic problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059.

Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.

The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

If you receive an unsolicited email claiming to be from the IRS, forward this message to phishing@irs.gov. You may also report misuse of the IRS name, logo, or other IRS property to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at spam@uce.gov or report them at www.ftc.gov/complaint. You can contact the FTC at www.ftc.gov/idtheft or 877-IDTHEFT (877-438-4338). If you have been the victim of identity theft, see www.IdentityTheft.gov and Pub. 5027.

Visit www.irs.gov/IdentityTheft to learn more about identity theft and how to reduce your risk.

Privacy Act Notice

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; the cancellation of debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Under section 3406, payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer. Certain penalties may also apply for providing false or fraudulent information.

IMPORTANT: This Letter of Transmittal or a manually signed facsimile thereof (together with all other required documents) must be received by the Depositary prior to 5:00 p.m., New York City time, on June 30, 2022 (or if the offer is extended, the expiration as extended), at the appropriate address set forth below:

The Depositary for the Offer is:

Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company, N.A.


By First Class Mail:		By Registered, Certified, or Express Mail, or Overnight Courier:

Computershare		Computershare
c/o Voluntary Corporate Actions		c/o Voluntary Corporate Actions
PO Box 43011		150 Royall St, Suite V
Providence, RI 02940-3011		Canton, MA 02021

Any questions or requests for assistance or additional copies of this Letter of Transmittal, the Offer to Purchase, and other documents may be directed to the Information Agent at its telephone number and location listed below.

The Information Agent for the Offer is:

Georgeson LLC

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Shareholders, Banks and Brokers may call toll free: (866) 431-2110

CORPORATE ACTIONS VOLUNTARY COY XWMF

EX-99.(A)(1)(III) 4 d293633dex99a1iii.htm EX-99.(A)(1)(III) EX-99.(a)(1)(iii)

Exhibit (a)(1)(iii)

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

620 EIGHTH AVENUE

NEW YORK, NEW YORK 10018

DEAR STOCKHOLDER:

The Board of Directors of Western Asset Middle Market Income Fund Inc. (the “Fund”) has authorized a tender offer for up to 2.5% of the Fund’s outstanding shares of Common Stock, par value $.001 per share (the “Shares”). Accordingly, the Fund is hereby commencing an offer to purchase for cash up to 3,701 Shares. The offer is at a price equal to the Fund’s net asset value per Share (“NAV”) as of the close of the customary trading session (normally 4:00 p.m. New York City time) on the New York Stock Exchange (“NYSE”) on June 30, 2022 (or if the Offer is extended, on the date to which the Offer is extended), upon the terms and conditions set forth in the enclosed Offer to Purchase and related Letter of Transmittal (which together constitute the “Offer”). In accordance with the rules promulgated by the Securities and Exchange Commission, the Fund has the ability to purchase up to an additional 2% of the Fund’s outstanding Shares without amending or extending the Offer.

The purpose of this Offer is to provide liquidity to stockholders of the Fund (Stockholders), as contemplated by and in accordance with the procedures set forth in the Fund’s prospectus. The deadline for participating in the Offer is 5:00 p.m., New York City time, June 30, 2022, or such later date to which the Offer is extended (the “Termination Date”). Stockholders who choose to participate in the Offer can expect to receive payment for Shares tendered and accepted in the manner and at such time as set forth in the Offer.

If, after carefully evaluating all information set forth in the Offer, you wish to tender Shares pursuant to the Offer, please either follow the instructions contained in the Offer or, if your Shares are held of record in the name of a broker, dealer, commercial bank, trust company or other nominee, contact such firm to effect the tender for you. Stockholders are urged to consult their own investment and tax advisors and make their own decisions whether to tender any Shares.

As of April 29, 2022, the NAV per Share was $607.53, and 148,078 Shares were issued and outstanding. An estimate of the Fund’s current NAV during the pendency of this Offer may be obtained by contacting Georgeson LLC, the Fund’s Information Agent, toll free at (866) 431-2110.

None of the Fund, its Board of Directors (the “Board”), its investment manager, Legg Mason Partners Fund Advisor, LLC or its subadviser, Western Asset Management Company, LLC, is making any recommendation to any Stockholder whether to tender or refrain from tendering Shares in the Offer. The Fund and the Board urge each Stockholder to read and evaluate the Offer and related materials carefully and make his or her own decision.

Questions, requests for assistance and requests for additional copies of this Offer and related materials should be directed to Georgeson LLC, the Fund’s Information Agent, toll free at (866) 431-2110.

Sincerely,

/s/ Jane E. Trust

Name: Jane E. Trust

Title: Chairman, President and Chief Executive Officer

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

June 1, 2022

EX-99.(B)(10) 5 d293633dex99b10.htm EX-99.(B)(10) EX-99.(b)(10)

Exhibit (b)(10)

FORM OF MASTER MARGIN LOAN AGREEMENT

dated as of May 11, 2022

between

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

as Borrower

and

THE BANK OF NEW YORK MELLON

as Lender

-i-

This MASTER MARGIN LOAN AGREEMENT (this “Agreement”), is entered into and dated as of May 11, 2022 (the “Effective Date”), between WESTERN ASSET MIDDLE MARKET INCOME FUND INC., a corporation organized under the laws of Maryland, as borrower (the “Borrower”), and THE BANK OF NEW YORK MELLON, a New York State chartered bank, as lender (together with its successors and permitted assigns, the “Bank”).

Certain capitalized terms used in this Agreement are defined in Annex A hereto. Any reference to any document or agreement in this Agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms or the terms of this Agreement.

ARTICLE I

MARGIN LOANS

SECTION 1.01. Margin Loan Commitment. Subject to the terms and conditions of this Agreement, during the period from and including the Effective Date and ending on and excluding the Maturity Date (unless terminated earlier), the Bank agrees to make from time to time margin loans (each a “Margin Loan” and, together, the “Margin Loans”) to the Borrower in U.S. Dollars in the amounts specified by the Borrower in the applicable Borrowing Notice; provided that after giving effect to the making of any Margin Loan the Aggregate Outstanding Amount does not exceed the lesser of the Margin Loan Commitment Amount in effect at such time and the Aggregate Collateral Value.

SECTION 1.02. Minimum Borrowing Amounts; Borrowing Mechanics.

(a) Whenever the Borrower desires the Bank to make a Margin Loan, the Borrower shall deliver to the Bank an irrevocable written notice substantially in the form of Exhibit A (a “Borrowing Notice”), which Borrowing Notice must be received by the Bank not later than 12:00 noon (New York City time) three (3) Business Days prior to the borrowing date specified in the Borrowing Notice (such date, or if such date is not a Business Day, the next following Business Day, the “Borrowing Date”). Upon receipt by the Bank of a Borrowing Notice and satisfaction of the conditions set forth in Sections 1.03 and 1.04 below, the Bank shall transfer the principal amount of the applicable Margin Loan to the Borrower on the Borrowing Date.

(b) For each Margin Loan, the duly completed and executed Borrowing Notice relating to such Margin Loan, together with this Agreement shall constitute conclusive evidence of the terms agreed between the Borrower and the Bank with respect to such Margin Loan.

(c) Each Margin Loan hereunder shall be in an amount of not less than U.S. $100,000, or any greater amount that is a whole multiple of U.S. $100,000; provided, that a Margin Loan may be in amount equal to (i) the Margin Loan Commitment Amount then in effect, minus (ii) the Aggregate Outstanding Amount.

SECTION 1.03. Conditions to Effectiveness. This Agreement and the Bank’s commitment in Section 1.01 and obligation to make Margin Loans in accordance with Section 1.02 of this Agreement shall not become effective until (a) the Bank shall have received originals or electronic versions (followed by originals) of this Agreement, duly and properly executed and delivered by an authorized signatory of the Borrower, (b) the Bank shall have received duly completed originals or electronic versions (followed by originals) of a Form U-1 Purpose Statement published by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) with respect to the Margin Loans signed by a Responsible Officer of the Borrower and satisfactory to the Bank, (c) the Bank shall have received the favorable legal opinion of outside counsel to the Borrower, in form and substance satisfactory to the Bank and (d) the Bank shall have received a certificate of the Secretary of the Borrower, in form and substance satisfactory to the Bank, (i) certifying the names and true signatures of the officers of the Borrower authorized to execute, deliver and perform, as applicable, this Agreement and all other Margin Loan Documents to be delivered by it hereunder and (ii) attaching copies of all documents evidencing all necessary corporate action and governmental approvals, if any, with respect to the authorization for the execution, delivery and performance of each such Margin Loan Document and the transactions contemplated hereby and thereby.

SECTION 1.04. Conditions of Each Margin Loan. Any request by the Borrower for a Margin Loan hereunder or the execution by the Borrower of a Borrowing Notice for such Margin Loan, shall be deemed to be a representation and warranty by the Borrower that each of the following is and shall be true and correct as of the applicable Borrowing Date after giving effect to the making of the requested Margin Loan: (a) no Default or Event of Default shall have occurred and be continuing; (b) all representations and warranties made by the Borrower herein shall be true and correct on and as of such date with the same force and effect as if made on and as of such date; (c) the Borrower shall have complied with all covenants and conditions precedent contained herein; and (d) the Aggregate Collateral Value will at least equal the Aggregate Outstanding Amount. The accuracy of each such representation shall be a condition precedent to the Bank’s obligation to make such Margin Loan.

SECTION 1.05. Promise to Pay. The Borrower hereby unconditionally promises and agrees to pay to the Bank the aggregate outstanding principal amount of each Margin Loan on the Maturity Date and further agrees to pay all unpaid interest accrued thereon and other amounts due and payable hereunder, in accordance with this Agreement.

SECTION 1.06. Evidence of Debt. The Bank shall maintain, in accordance with its customary and usual practice, an account evidencing the indebtedness of the Borrower to the Bank resulting from each Margin Loan, including the amounts of principal and interest payable and paid to the Bank in respect of each Margin Loan. The entries made in the account shall be conclusive absent manifest error; provided that any error therein shall not in any manner affect the validity or enforceability of any obligation of the Borrower to repay any Margin Loan actually made by the Bank and interest thereon.

ARTICLE II

PAYMENTS

SECTION 2.01. Applicable Interest Rates. Unless otherwise agreed by the Bank and the Borrower, each Margin Loan made or maintained by the Bank shall bear interest on the unpaid principal amount from the Borrowing Date until maturity (whether by acceleration or otherwise) at a rate per annum equal to the Applicable Interest Rate for such Margin Loan. During any Interest Period, (a) if the Applicable Index Rate is USD-OBFR, then the interest for such Interest Period shall be computed daily, based on the Applicable Interest Rate for such day, and (b) if the Applicable Index Rate is any other rate, then the Bank shall compute the interest in a commercially reasonable manner.

SECTION 2.02. Interest Payments. Unless otherwise agreed to by the Bank and the Borrower, interest on each of the Margin Loans shall be payable (i) on each Interest Payment Date; (ii) on the Maturity Date; and (iii) on any date of prepayment on a day other than the last day of an Interest Period, on the principal amount so prepaid.

SECTION 2.03. Fees on Unused Commitment.SECTION 2.04. A commitment fee (a “Commitment Fee”) shall accrue on each day from and including the date that is 30 calendar days after the Effective Date to but excluding the earlier of the Maturity Date or the termination date of this Agreement in an amount equal to (i) the excess (if any) of the Margin Loan Commitment Amount for such day over the Aggregate Outstanding Amount on such day, multiplied by (ii) the applicable Commitment Fee Rate divided by 360; provided, that no Commitment Fee shall accrue on any day that the Aggregate Outstanding Amount is at least 75% of the Margin Loan Commitment Amount then in effect. All accrued and unpaid Commitment Fees shall be payable on each Commitment Fee Payment Date and the earlier of the Maturity Date or the termination date of this Agreement.

SECTION 2.05. Default Interest. Notwithstanding Section 2.01, if an Event of Default shall occur, interest shall accrue from and including the date such Event of Default occurs until (but excluding) the first date, if any, on which there are no unremedied Events of Default, for each day in such period on all amounts outstanding on such day at a rate per annum equal to the Default Rate to the fullest extent permitted by applicable Law. Such default interest shall be payable on demand. At any time when all Events of Default shall have been remedied, the interest rate shall be the otherwise applicable interest rate as determined pursuant to this Agreement.

SECTION 2.06. Optional Prepayments; Termination or Reduction of Commitment.

(a) The Borrower shall have the right, at any time and from time to time, to prepay, in whole or in part, any Margin Loans at any time upon delivery of a Prepayment Notice five (5) Business Days’ prior to the Prepayment Date. Any Prepayment Notice delivered to the Bank after 2:00 p.m. shall be deemed to have been delivered on the next succeeding Business Day. Upon delivery of the Prepayment Notice by the Borrower to the Bank, the Prepayment Amount specified in such notice shall be due and payable no later than 2:00 p.m. on the Prepayment Date. Any partial prepayment shall be in an amount of not less than $100,000 or any greater amount that is a whole multiple of $100,000.

(b) The Borrower may, upon notice to the Bank, terminate the Margin Loan Commitment Amount, or from time to time permanently reduce the Margin Loan Commitment Amount; provided that (i) any such notice shall be received by the Bank not later than 11:00 a.m. five (5) Business Days prior to the date of termination or reduction, (ii) any such partial

reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $1,000,000 in excess thereof, and (iii) the Borrower shall not terminate or reduce the Margin Loan Commitment Amount if, after giving effect thereto and to any concurrent prepayments hereunder, the Aggregate Outstanding Amount would exceed the Margin Loan Commitment Amount. All fees accrued until the effective date of any termination of the Margin Loan Commitment Amount shall be paid on the effective date of such termination.

SECTION 2.07. Method of Payment to the Bank. All payments due to the Bank under this Agreement shall be made by transferring immediately available funds in U.S. Dollars to the Bank’s account (as specified in Annex B) on the date due and payable to the Bank’s account (as specified in Annex B).

SECTION 2.08. Application of Payments. Except as otherwise provided in Section 2.05, all payments received by the Bank hereunder shall be applied first to any accrued and unpaid interest on the applicable Margin Loans and then to the outstanding principal amount of the applicable Margin Loans.

SECTION 2.09. Funding Indemnity. If the Bank shall incur any loss, cost or expense as a result of:

(a) any prepayment of a Margin Loan by the Borrower on a date prior to the Maturity Date

(b) any failure to prepay a Margin Loan on the Prepayment Date specified in the related Prepayment Notice;

(c) any failure (because of a failure to meet the conditions of Section 1.04 or otherwise) by the Borrower to borrow a Margin Loan on the Borrowing Date specified in the Borrowing Notice for such Margin Loan; or

(d) acceleration of the maturity of a Margin Loan owed by the Borrower as a result of the occurrence of any Event of Default,

then, upon the demand of the Bank, the Borrower shall pay to the Bank any Breakage Amount resulting therefrom promptly following such demand. For the avoidance of doubt, any amount payable pursuant to this Section 2.09 as a result of the prepayment of a Margin Loan shall be due and payable on the Prepayment Date.

SECTION 2.10. Taxes.

(a) The Borrower shall make all payments required to be made by it under this Agreement without any Tax Deduction, unless a Tax Deduction is required by law (each such payment, a “Tax Payment”). If a Tax Deduction is required to be made by law by the Borrower, the amount of the payment due from the Borrower shall be increased by such additional amounts as may be necessary so that after all Tax Deductions (including Tax Deductions applicable to such additional amounts), the Bank or its Affiliates, any Participant, or any Assignee, as applicable (for the purposes of this Section 2.10, any such party, a “Lender”) shall receive an amount equal to the payment that would have been due if no Tax Deduction had

been required. If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any associated Tax Payment in accordance with applicable law. Within thirty (30) days of making a Tax Deduction, the Borrower must deliver to the Bank evidence satisfactory to the Bank (acting reasonably) that an amount equal to the Tax Payment has been paid to the relevant taxing authority.

(b)

(i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments made under this Agreement or any other Margin Loan Document shall deliver to the Borrower, at the time or times reasonably requested by the Borrower, such properly completed and executed documentation reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower as will enable the Borrower to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

(ii) Without limiting the generality of Section 2.10(b)(i), if a payment made to a Lender under this Agreement or any other Margin Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower at the time or times prescribed by law and at such time or times reasonably requested by the Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower as may be necessary for the Borrower to comply with its obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (b), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(iii) Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower in writing of its legal inability to do so.

(c) The Borrower is not required to make an increased payment to the Lender under paragraph (a) above for a Tax Deduction in respect of Tax imposed by the jurisdiction from which the Borrower makes the payment if the Borrower is able to demonstrate that the Tax Deduction would not have been required if the Lender had used its reasonable endeavors to complete any procedural formalities (including, for avoidance of doubt, (a) providing Borrower with any documentation as may be necessary for the Borrower to comply with its obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA and/or (b) providing Borrower with an IRS Form W-9 or the applicable IRS Form

W-8 or any applicable successor forms) necessary for the Borrower to obtain authorization to make any payment to be made by it without a Tax Deduction in a timely manner; provided, however, that nothing in the foregoing will require the Lender to take any action (i) that is not permitted by law; (ii) that involves material costs to the Lender; or (iii) if the Lender is not notified by the Borrower of such procedural formalities in a timely manner.

(d) The Borrower agrees to pay any present or future stamp, value added or documentary Taxes or any other excise or property Taxes, charges, or similar levies that arise from any payment made hereunder or from the execution, delivery, performance, recordation, or filing of, or otherwise with respect to this Agreement or any other Margin Loan Document.

(e) Each Lender shall indemnify the Borrower, within 10 days after demand therefor, for any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.06(e) relating to the maintenance of a Participant Register.

(f) Each party’s obligations under this Section shall survive any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement or other Margin Loan Document and the repayment, satisfaction or discharge of all obligations under any this Agreement or other Margin Loan Document.

ARTICLE III

CHANGE IN CIRCUMSTANCES

SECTION 3.01. Increased Costs; Reserves. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, the Bank;

(b) subject the Bank to any Tax of any kind whatsoever with respect to this Agreement or any Margin Loan made by it, or change the basis of taxation of payments to the Bank in respect thereof (except for the imposition of, or any change in the rate of, any Tax on the net income of the Bank in the jurisdiction in which the Bank is organized or resident for Tax purposes); or

and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining any Margin Loan (or of maintaining its obligation to make any Margin Loan) or to reduce the amount of any sum received or receivable by the Bank hereunder (whether of principal, interest or any other amount) then, upon demand of the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such additional costs incurred or reductions suffered within fifteen (15) days after receipt of such demand.

SECTION 3.02. Capital Requirements. If the Bank shall determine that, on or after the date hereof, any Change in Law regarding capital adequacy or any request or directive regarding capital adequacy shall occur and has or would have the effect of reducing the rate of return on capital of the Bank (or its parent) as a consequence of its obligations under this Agreement or the Margin Loan made by the Bank hereunder to a level below that which the Bank (or its parent) could have achieved but for such Change in Law by an amount determined by the Bank to be material, then, upon demand of the Bank, the Borrower shall pay to the Bank such additional amounts as will compensate the Bank (or its parent) for the portion of any such reduction that is reasonably allocable to this Agreement within fifteen (15) days after receipt of such demand.

SECTION 3.03. Certificate for Reimbursement. A certificate of the Bank claiming compensation under Sections 2.09, 3.01 or 3.02 and setting forth the additional amount or amounts to be paid to it thereunder shall be conclusive if reasonably determined. In determining such amount, the Bank may use any reasonable averaging and attribution methods.

SECTION 3.04 Illegality; Change in Insolvency Law. If (a) the Bank determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for the Bank to make, maintain or fund Margin Loans, or to determine or charge interest rates based upon the Applicable Interest Rate, or any Governmental Authority has imposed material restrictions on the authority of the Bank to purchase or sell, or take deposits of, U.S. Dollars or (b) there is any change in (or in the interpretation, administration or application of) any Law that changes the definition of “securities contract” under the Bankruptcy Code or affects the treatment of any Margin Loan as such thereunder, and such change is reasonably likely to have a Material Adverse Effect on the rights and remedies of the Bank as a secured creditor of Borrower, then, on notice thereof by the Bank to the Borrower, any obligations of the Bank to make or continue Margin Loans shall be suspended until the Bank notifies the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand of the Bank, prepay such Margin Loans, either on the last day of the Interest Period thereof, if the Bank may lawfully continue to maintain such Margin Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Margin Loans. Upon any such prepayment, the Borrower shall also pay accrued and unpaid interest on the amount so prepaid and all other amounts due and payable to the Bank under this Agreement.

ARTICLE IV

COLLATERAL

SECTION 4.01. Establishment of Collateral Account. The Bank, in its capacity as a securities intermediary as defined in Article 8 of the UCC (“Article 8”) to the extent the same may be applicable, or in applicable federal law or regulations, shall establish the Collateral Account as a separate account on its books. The Bank hereby agrees that any property held in the Collateral Account (other than cash) shall be a financial asset for purposes of Article 8 to the extent the same may be applicable.

SECTION 4.02. Security for the Secured Obligations. The Borrower hereby grants to the Bank a first priority Lien and security interest in the Collateral as security for the obligations of the Borrower hereunder and under each other Margin Loan Document in respect of the Margin Loans (the “Secured Obligations”).

SECTION 4.03. Collateral Maintenance.

(a) The Borrower hereby authorizes the Bank to instruct the Custodian to move items of Eligible Collateral from the Borrower’s general custody accounts created under the custody agreement between the Custodian and the Borrower to the Collateral Account to satisfy the Borrower’s obligations hereunder and authorizes the Custodian to follow any such instructions.

(b) If at the close of any Business Day of the Borrower, (i) the Aggregate Collateral Value is less than the Aggregate Outstanding Amount and (ii) such difference is greater than the Minimum Transfer Amount, then the Borrower shall immediately deliver additional Eligible Collateral to the Collateral Account such that, after giving effect to such delivery to the Collateral Account, the Aggregate Collateral Value is greater than or equal to the Aggregate Outstanding Amount. The Collateral Value shall be determined by the Bank on each Business Day during the term of this Agreement. The Bank’s determination of the Collateral Value shall be conclusive and binding.

(c) If at the close of business on any Business Day, (i) there is Excess Collateral Value with respect to any Margin Loan, and (ii) such Excess Collateral Value is greater than the Minimum Transfer Amount, then the Bank shall, upon two (2) Business Days’ notice from the Borrower, return to the Borrower and release from the Lien of this Agreement items of Eligible Collateral for such Margin Loan having an aggregate Collateral Value equal to such Excess Collateral Value; provided that (i) no Event of Default with respect to the Borrower shall have occurred and be continuing and (ii) the Borrower shall be entitled to a return of such Excess Collateral Value only to the extent that a Collateral Value Deficit does not exist with respect to any other Margin Loan at such time of transfer.

(d) At any time and from time to time, the Bank shall, upon two (2) Business Days’ notice from the Borrower, return any item(s) of Collateral to the Borrower indicated by the Borrower provided that the Borrower shall, prior to the Bank giving such instruction, delivered substitute item(s) of Eligible Collateral to the Collateral Account; provided, however, that after giving effect to any such substitution, the Aggregate Collateral Value shall not be less than the Aggregate Outstanding Amount.

(e) At all times prior to the disposition of Collateral by the Bank pursuant to Section 7.02, the Borrower may, in its sole discretion, exercise, or refrain from exercising, any and all rights, including any voting and consent rights, or to take or refrain from any and all actions, which the Borrower may be entitled to take or assert in connection with any securities pledged as Collateral. The Bank agrees that the Borrower shall have the right to receive, retain and use freely all dividends and interest distributed in respect of the Collateral until such time as the Bank shall have rights to exercise remedies under Section 7.02. For the avoidance of doubt, the Bank shall have no voting rights with respect to any securities pledged as Collateral, except to the extent that the Bank buys any such securities in a sale or other disposition made pursuant to Section 7.02.

SECTION 4.04. Representations and Covenants – Collateral. The Borrower represents, warrants and covenants to the Bank that, as of the date hereof and until payment and performance in full of all Secured Obligations:

(a) the Borrower owns, and will at all times continue to own, the Collateral free and clear of any Lien other than in favor of the Bank;

(b) this Agreement creates in favor of the Bank a valid security interest in the Collateral and the Bank has a perfected, first priority security interest in the Collateral Account and all Property including cash from time to time credited thereto;

(c) the Borrower will defend the Collateral against all claims or demands of all Persons (other than the Bank) claiming the Collateral or any interest therein; and

(d) the Bank will have a first priority security interest in the Collateral Account and any Property including cash credited thereto, free and clear of any Lien.

SECTION 4.05. Termination of Security Interest. The Bank’s security interest in the Collateral will terminate automatically upon repayment in full by the Borrower of the Secured Obligations.

SECTION 4.06. [reserved]

SECTION 4.07. Taxes.

(a) The Borrower shall be responsible for all Taxes with respect to any Collateral or any transaction related thereto (except for those Taxes that result from the exercise of the Bank’s rights under Section 4.06).

(b) If the Bank is required to withhold any amount for Taxes under applicable law, the Bank is authorized to withhold and pay such amount from the account to which the Tax obligation relates to the relevant taxing authority.

(c) If the Borrower reasonably believes the Borrower is eligible, pursuant to applicable law or to the provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax which is otherwise required to be withheld or paid on behalf of the Borrower under any applicable law, the Bank shall withhold and pay such Tax at such reduced rate or refrain from withholding or paying such Tax, as appropriate; provided that the Bank shall have received from the Borrower all documentary evidence of residence or other qualification for such reduced rate or exemption required to be received under such applicable law or treaty.

(d) In the event that the Borrower reasonably believes that a reduced rate of, or exemption from, any Tax is obtainable only by means of an application for refund, the Bank shall have no responsibility for the accuracy or validity of any forms or documentation provided by the Borrower.

(e) The Borrower hereby agrees to indemnify and hold harmless the Bank and any other withholding agent in respect of any liability arising from any under withholding or underpayment of any Tax which results from the inaccuracy or invalidity of any such forms or other documentation, and such obligation to indemnify shall be a continuing obligation of the Borrower, its successors and assigns, notwithstanding the termination of this Agreement.

ARTICLE V

GENERAL REPRESENTATIONS AND WARRANTIES

SECTION 5.01. Representations and Warranties of the Borrower. The Borrower represents and warrants to the Bank that:

(a) the Borrower (i) is duly organized, validly existing and in good standing under the laws of Maryland; (ii) has all requisite power and authority under such law to own its Property and to carry on its business as now being conducted; and (iii) is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect;

(b) the Borrower has all requisite power and authority to enter into this Agreement and the other Margin Loan Documents executed by it, to make any borrowings herein, to grant to the Bank the Liens described herein, and to perform all of its obligations hereunder and under the other Margin Loan Documents executed by it;

(c) no consent, approval, order, license or exemption from or filing with or registration with any Governmental Authority nor any approval of any other Person, is or will be required as a condition to (i) the entry into, valid execution and delivery of, or performance by the Borrower under, this Agreement or any other Margin Loan Document; (ii) the borrowing of the Margin Loans; (iii) the granting of the first priority Lien and security interest in the Collateral pursuant to this Agreement; or (iv) the validity or enforceability of this Agreement or any other Margin Loan Document;

(d) each of the Margin Loan Documents has been duly authorized, executed and delivered by the Borrower and constitutes, and the Secured Obligations will evidence, the valid and legally binding obligations of the Borrower enforceable in accordance with their terms, subject to bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and general principles of equity;

(e) the entry into, execution and delivery of, and performance by the Borrower under, each of the Margin Loan Documents and the borrowing of the Margin Loans do not (i) violate, contravene or conflict with any provision of any organizational, constitutive, operative, or governing document of the Borrower; (ii) violate, contravene or constitute a default under any order, decree or judgment, or any Law; (iii) violate, contravene or conflict with, result in a breach of or constitute (with notice or lapse of time or both) a default under, any agreement, mortgage, indenture or contract to which the Borrower is a party or by which the Borrower or any of its Property is bound, which defaults, conflicts, or breaches could reasonably be expected to have a Material Adverse Effect; (iv) result in the creation or imposition of any Lien upon any Property of the Borrower other than the security interest and Lien granted to the Bank under the Margin Loan Documents; or (v) contravene or constitute a default under any provision of Law or any judgment, injunction, order or decree binding upon the Borrower;

(f) neither the making of any Margin Loan hereunder, nor the use of the proceeds thereof, violates or will violate any law, including, Regulations U and X of the Federal Reserve;

(g) all returns and reports regarding Taxes of the Borrower required to be filed have been timely filed, and all Taxes shown on such returns or reports to be due and payable and all assessments, fees and other governmental charges upon the Borrower and upon its assets, income, businesses and franchises that are due and payable have been paid when due and payable, except where any failure to so file or pay would not reasonably be expected to have a Material Adverse Effect;

(h) the Borrower is in compliance with the requirements of all Laws applicable to or pertaining to it or its Property, except where any such non-compliance, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect;

(i) the operations of the Borrower and its Subsidiaries, if any, are and have been conducted at all times in compliance in all material respects with the applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970 and the applicable money laundering statutes of other jurisdictions in which the Borrower and its Subsidiaries, if any, conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable 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 Borrower or any of its Subsidiaries, if any, with respect to the Anti-Money Laundering Laws is pending;

(j) (i) neither the Borrower nor any of its Subsidiaries (if any), directors or officers is, and to the knowledge of the Borrower and any of its Subsidiaries (if any), none of their employees, agents or representatives are, an individual or entity (“Entity”) that is, or is 50% or more owned or controlled by an Entity that is: (A) listed in any sanctions related list of blocked or designated Entities maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State or the U.S. Department of Commerce with whom U.S. persons are generally prohibited from transacting or similar blocking sanctions imposed by the United Nations Security Council, the European Union or Her Majesty’s Treasury (such listed entities, “Sanctioned Entities”), nor (B) organized under the laws of or resident in a country or territory that is the subject of comprehensive, country-wide, or territory-wide Sanctions that broadly prohibit dealings with that country or territory (currently, the Crimea, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic regions of Ukraine, Cuba, Iran, North Korea, and Syria) (collectively, “Sanctioned Countries” and each, a “Sanctioned Country”);

(ii) the Borrower and its Subsidiaries, if any, will not, directly or knowingly indirectly, use the proceeds of any Margin Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, if any, joint venture partner or other Entity: (A) for the purpose of funding or facilitating any activities or business of or with a Sanctioned Entity or in any country or territory that, at the time of such funding or facilitation, is a Sanctioned Country; or (B) in any other manner that will result in a violation of, or constitute sanctionable conduct under, Sanctions by any Entity (including any Entity participating in the transaction, whether as lender, advisor or otherwise);

(iii) except as disclosed to the Bank, for the past five (5) years, the Borrower and its Subsidiaries, if any, have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with a Sanctioned Entity, or with or in a Sanctioned Country in violations of Sanctions;

(k) each Margin Loan will be a “securities contract” as such term is defined in the Bankruptcy Code, and a “margin loan” for purposes of such definition;

(l) the proceeds of each advance will be used solely to finance the purchase, sale, carrying and/or trading of debt or equity securities for the account of the Borrower;

(m) the Borrower will not use the proceeds of any Margin Loan (i) to purchase securities from any Affiliate of the Bank, unless the Affiliate is acting as an agent or riskless principal and the security is not issued, underwritten or sold as principal by any Affiliate of the Bank; (ii) to repay debt to any Affiliate of the Bank; or (iii) to engage in any other transaction in which the proceeds are transferred to or for the benefit of an Affiliate of the Bank, in each case unless the Bank otherwise agrees in writing;

(n) the assets that are used in connection with the execution, delivery and performance of this Agreement or the other Margin Loan Documents, any agreement or instrument contemplated hereby or thereby, or the transactions contemplated hereby or thereby are not (i) the assets of an “employee benefit plan” (within the meaning of Section 3(3) of ERISA) or other plan subject to Section 406 of ERISA; (ii) a plan described in Section 4975 of the Code to which Section 4975 of the Code applies; (iii) an entity whose underlying assets include “plan assets” by reason of U.S. Department of Labor regulation Section 2510.3-101 (as modified by Section 3(42) of ERISA) (the “Plan Asset Regulation”); or (iv) a “governmental plan” within the meaning of Section 3(32) of ERISA (a “Governmental Plan”) that is subject to any state law that is applicable to Borrower and that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code and prohibit the transactions contemplated by this Agreement (“Similar Law”) or an entity the underlying assets of which are deemed to be the assets of such a Governmental Plan under applicable Similar Law;

(o) the execution, delivery and performance of this Agreement and the other Margin Loan Documents, any agreement or instrument contemplated hereby or thereby, and the transactions contemplated hereby or thereby do not and will not constitute a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the Code;

(p) neither the Borrower nor any Subsidiary or ERISA Affiliate thereof maintains, contributes to or has or could reasonably be expected to have any liability or obligation with respect to any employee benefit plan that is (i) a “multiemployer plan” (within the meaning of Section 3(37) of ERISA); (ii) a “multiple employer plan” (within the meaning of Section 413(c) of the Code); or (iii) any single employer plan or other pension plan subject to Title IV or Section 302 of ERISA or Section 412 of the Code, in each case which could reasonably be expected to have a Material Adverse Effect;

(q) Borrower represents and warrants that: (i) Borrower is familiar with the provisions of Rule 144 under the Securities Act of 1933, as amended; (ii) Borrower is not, and within the preceding three months has not been, an “affiliate” of the issuer (as that term is used in Rule 144) of any Eligible Securities; (iii) all Eligible Securities are not “restricted securities” within the meaning of Rule 144 or otherwise subject to any legal, regulatory or contractual restrictions on transfer; and (iv) Borrower is not an “insider” of the issuer of any Eligible Securities. For purposes of this agreement “insider” shall mean directors, officers and principal stockholders as set forth in Section 16(a)(1) under the Securities Exchange Act of 1934, as amended.

(r) the Borrower is a registered “investment company” within the meaning of the Investment Company Act and is authorized to conduct business as an investment company;

(s) the Borrower is in compliance in all material respects with the Fundamental Policies;

(t) there is no threatened or pending litigation or governmental or arbitration proceeding against the Borrower or any of its Property, in each case, which could reasonably be expected to have a Material Adverse Effect;

(u) the Borrower has an asset coverage that complies with Section 18 of the Investment Company Act and is in compliance in all material respects with all other requirements of the Investment Company Act; and

(v) the Borrower has no Subsidiaries.

ARTICLE VI

COVENANTS

The Borrower hereby covenants and agrees that, until payment in full of all Margin Loans hereunder, the performance of all other obligations of the Borrower hereunder and the termination of this Agreement (except to the extent compliance is waived in writing):

SECTION 6.01. Preservation of Legal Existence; Maintenance of Business. The Borrower will do, or cause to be done, all things necessary to preserve and keep in full force and effect its legal existence. The Borrower shall preserve and keep in full force and effect all licenses, permits, franchises, approvals, patents, trademarks, trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business where the failure to do so would reasonably be expected to have a Material Adverse Effect.

SECTION 6.02. Compliance with Laws. The Borrower shall comply in all respects with the requirements of all Laws applicable to it or its Property and operations, where the noncompliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

SECTION 6.03. Borrower Financial Information. The Borrower shall deliver to the Bank:

(a) as soon as available, but in any event within sixty (60) days after the end of each fiscal year of the Borrower and its consolidated Subsidiaries, a statement of financial condition of the Borrower, as at the end of such fiscal year, and the related consolidated statements of income, cash flows, changes in shareholders’ equity and changes in liabilities subordinated to claims of general creditors for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP and the rules and regulations of the SEC (each such set of financial statements, “Annual Financial Statements”), audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Bank, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of audit not reasonably acceptable to the Bank;

(b) promptly after the sending or filing thereof, copies of any other reports made on Form N-CSR or Form N-Q, schedules, supplements, material financial statements, material reports, material notices or material proxy statements filed by or on behalf of the Borrower with any securities exchange, the SEC, FINRA or other regulatory authority or sent by the Borrower to its stockholders or other equity holders;

(c) within five (5) Business Days of the end of each calendar month, a copy of its trial balance for such month (including at a minimum its closing Net Asset Value); and

(d) promptly upon request, such other financial information as the Bank may reasonably request;

provided that information required to be delivered pursuant to this Section 6.03 shall be deemed to have been delivered on the date on which (i) in the case of non-routine information required to be delivered pursuant to this Section 6.03, the Borrower provides notice to the Bank that such information has been posted on the Borrower’s website at www.franklintempleton.com, at http://www.sec.gov/edgar/searchedgar/companysearch.html or at another website identified in such notice and accessible by the Bank without charge or (ii) in the case of routine information required to be delivered pursuant to this Section 6.03, such information has been posted on the Borrower’s website at www.franklintempleton.com, at http://www.sec.gov/edgar/searchedgar/companysearch.html or at another website identified in a written notice from Borrower to the Bank and accessible by the Bank without charge.

SECTION 6.04. Taxes. The Borrower shall file all material Tax returns required to be filed in any jurisdiction, and shall cause all material Taxes imposed, levied, or assessed against the Borrower, or any of its assets, income, or franchises to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such Taxes is contested by the Borrower in good faith and the Borrower has established adequate reserves therefor in accordance with GAAP in its jurisdiction of organization.

SECTION 6.05. Notice of Certain Events. The Borrower shall deliver to the Bank, promptly after knowledge thereof shall have come to the attention of any Responsible Officer of the Borrower or any of its Subsidiaries, written notice of any pending investigation or regulatory proceeding (other than routine periodic investigations or reviews) by any Governmental Authority concerning the business, practices or operations of the Borrower or any of its Subsidiaries, or pending litigation or governmental or arbitration proceeding against the Borrower or any of its Property, in each case, which could reasonably be expected to have a Material Adverse Effect.

SECTION 6.06. ERISA. The Borrower shall not permit its assets that are used in connection with the execution, delivery and performance of this Agreement or the other Margin Loan Documents, to become (i) the assets of an “employee benefit plan” (within the meaning of Section 3(3) of ERISA) subject to Section 406 of ERISA; (ii) a plan described in Section 4975 of the Code to which Section 4975 of the Code applies; (iii) an entity whose underlying assets include “plan assets” by reason of the Plan Asset Regulations; or (iv) a Governmental Plan that is subject to any Similar Laws or an entity the underlying assets of which are deemed to be the assets of such a Governmental Plan subject to applicable Similar Laws.

SECTION 6.07. Payment of Obligations. The Borrower will pay, at or before maturity, all of the Borrower’s material obligations (excluding payment obligations under this Agreement, which are addressed elsewhere herein), except where the same may be contested in good faith or for which non-payment would not be expected to have a Material Adverse Effect; provided that Tax liabilities shall be governed by Section 6.04.

SECTION 6.08. Books and Records. The Borrower and its Subsidiaries shall keep proper books and records and accounts in which full, true and correct entries in conformity with GAAP, the rules and regulations under the Investment Company Act and all other requirements of Law shall be made of all dealings and transactions in relation to its business and activities.

SECTION 6.09. Compliance with Sanctions.

(a) The Borrower shall provide (following a request being made therefor) the Bank and the Bank’s Subsidiaries with any information regarding the Borrower and the Borrower’s Subsidiaries (if any) necessary for the Bank and the Bank’s Subsidiaries to comply with all applicable Sanctions and Anti-Money Laundering Laws.

(b) The Borrower will operate its business in a manner that is compliant with Sanctions from the perspective of the Borrower. If (i) the Borrower obtains actual knowledge or receives any written notice that the Borrower or its Subsidiaries, if any, is named a Sanctioned Entity, or (ii) the proceeds of the Margin Loans are used in a way that could result in a violation of Sanctions by any party thereto (including the Bank) (any such occurrence, an “OFAC Event”),

the Borrower shall promptly give notice to the Bank of such OFAC Event, and the Borrower hereby authorizes and consents to the Bank taking any and all steps the Bank deems necessary, in its sole discretion, to avoid a violation by the Bank of all applicable laws with respect to any such OFAC Event, including the requirements of Sanctions (including, without limitation, the freezing and/or blocking of assets, reporting of the OFAC Event to OFAC and rejection of additional transactions or dealings, including additional Margin Loans).

SECTION 6.10. Benefit Plans. The Borrower shall not, and shall not permit any of its Subsidiaries or any ERISA Affiliate to, maintain, contribute to or acquire any material liability or obligation with respect to any employee benefit plan that is (i) a “multiemployer plan” (within the meaning of Section 3(37) of ERISA); (ii) a “multiple employer plan” (within the meaning of Section 413(c) of the Code); or (iii) any single employer plan or other pension plan subject to Title IV or Section 302 of ERISA or Section 412 of the Code.

SECTION 6.11. Notices. The Borrower shall deliver to the Bank, promptly after knowledge thereof shall have come to the attention of any Responsible Officer or any of its Subsidiaries, written notice of the occurrence of any Default or Event of Default hereunder.

SECTION 6.12 No Subsidiaries. The Borrower shall not form any Subsidiaries or conduct any business or hold any assets through any Subsidiary.

SECTION 6.13 Compliance with Investment Company Act and Fundamental Policies. The Borrower shall comply in all material respects with the requirements of the Investment Company Act and with the Fundamental Policies.

SECTION 6.14 Limitation on Further Indebtedness. The Borrower will not create, incur, assume or suffer to exist any liability for indebtedness (including, without limitation, obligations under repurchase agreements), except (a) indebtedness under the Margin Loan Documents, (b) indebtedness that is (i) incurred in the ordinary course of business, (ii) permitted to be incurred in accordance with the Fundamental Policies, and (iii) in the aggregate, less than $150,000, (iv) indebtedness in the form of mandatory redeemable preferred shares issued in accordance with the Investment Company and (v) Permitted Indebtedness.

SECTION 6.15 Further Assurances. From time to time, the Borrower shall, at the request of the Bank, execute and deliver, or cause to be executed and delivered, such additional documents, instruments or certificates, and shall take all action, for the purposes of implementing or effectuating the provisions of this Agreement or any other Margin Loan Document. Upon the exercise by the Bank of any power, right, privilege or remedy pursuant to the Margin Loan Documents which requires the consent, approval, recording, qualification or authorization of any Governmental Authority, the Borrower will execute and deliver, or cause to be executed and delivered, all applications, certifications, instruments and other documents and papers that the Bank may require to obtain such consent, approval, recording, qualification or authorization.

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

SECTION 7.01. Events of Default. Each of the following events shall constitute an Event of Default (each, an “Event of Default”):

(a) default in the payment when due of any interest on any Margin Loan or other Secured Obligation (other than principal) under this Agreement or any other Margin Loan Document, and such default shall have continued for three (3) Business Days;

(b) default in the payment when due of any Commitment Fee, and such default shall have continued for three (3) Business Days;

(c) default in the payment when due of the principal amount of any Margin Loan, whether at the maturity thereof, by acceleration, by Prepayment Notice or otherwise;

(d) any representation or warranty made by the Borrower herein or in any other Margin Loan Document or in any certificate, report, financial statement or other document furnished to the Bank pursuant hereto or thereto or in connection with any transaction contemplated hereby or thereby proves untrue or incorrect in any material respect as of the date of the issuance or making or deemed making thereof;

(e) any default in the observance or performance of any covenant set forth Section 4.02, 4.04, 6.01 or 6.13 of this Agreement or in any other provision of any Margin Loan Document dealing with the use, disposition or remittance of the proceeds of Collateral;

(f) any default in the observance or performance of any covenant set forth Section 6.03, 6.04, 6.07 (and such failure shall have continued for three (3) Business Days; provided that such three (3) Business Day cure period shall not apply to any payments of principal) or 6.08 (if such default is reasonably be expected to have a Material Adverse Effect) of this Agreement;

(g) any default in the observance or performance of any covenant set forth Section 4.03 of this Agreement; provided that, the parties agree that no such event will give rise to an Event of Default if: (a) such event arises solely by reason of an error or omission of an administrative or operational nature; (b) proof is promptly provided to the Bank showing that funds or securities were available to such party to enable it to make the relevant payment or transfer when due; and (c) such relevant payment or transfer is made within two Business Days of notice of such failure to pay or transfer;

(h) default in the observance or performance of any other provision hereof or of any other Margin Loan Document which is not remedied within thirty (30) days after the occurrence thereof;

(i) any event occurs or condition exists (other than those described in this Section 7.01) which is specified as an event of default under any of the other Margin Loan Documents, or any of the Margin Loan Documents shall for any reason not be or shall cease to be in full force and effect or is declared to be null and void, or any of the Margin Loan

Documents shall for any reason fail or cease to create a valid and perfected first priority Lien in favor of the Bank in any Collateral purported to be covered thereby except as expressly permitted by the terms thereof, or the Borrower takes any action for the purpose of terminating, repudiating or rescinding any Margin Loan Document executed by it or any of its obligations thereunder, in each case without the express written consent of the Bank;

(j) the Borrower shall fail to make any payment when due (whether of principal or interest and regardless of amount) in respect of any indebtedness (including repurchase transactions or derivatives transactions) issued, assumed or guaranteed by the Borrower to the Bank or any of the Bank’s Affiliates or under any indenture, agreement or other instrument under which the same may be issued, beyond the grace period, if any, provided for in the instrument or agreement under which such indebtedness was created;

(k) the Borrower shall fail to make any payment when due (whether of principal or interest and regardless of amount) in respect of any indebtedness (including repurchase transactions or derivatives transactions) having an aggregate principal amount of more than three percent (3%) of the Net Asset Value of the Borrower as of the close of business on the Business Day immediately preceding such date of determination;

(l) any event or condition occurs that results in any indebtedness (including repurchase transactions or derivatives transactions) having an aggregate principal amount of more than three percent (3%) of the Net Asset Value of the Borrower as of the close of business on the Business Day immediately preceding such date of determination becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, but without any further lapse of time) the holder or holders of any such indebtedness or any trustee or agent on its behalf to cause any such indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

(m) any judgment or judgments, writ or writs, warrant or warrants of attachment, or any similar process or processes, shall be entered or filed against the Borrower, or against any of its Property, in an aggregate amount in excess of $1,000,000, and which remains undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days;

(n) the Custodian ceases to act at any time as the custodian for the Borrower (unless the Collateral Account has been established with a successor custodian acceptable to the Bank in its sole discretion);

(o) the agreement between the Borrower and the Custodian ceases to be in full force and effect, except to the extent that failure of any such agreement to be in full force and effect, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;

(p) an Act of Insolvency with respect to the Borrower;

(q) the Investment Manager performs an act that, in any applicable jurisdiction, constitutes fraud or criminal activity in the performance of its obligations under this Agreement or the Margin Loan Documents, or the Investment Manager or any officer, member, partner or other principal of the Investment Manager primarily responsible for the management

of the Collateral is indicted for a felony offense materially related to the Investment Manager’s activities in any securities, financial advisory or other management business; provided that any indictment arising from practices that have become the subject of contemporaneous actions against multiple investment advisers shall not constitute a Default for purposes of this clause 7.01(n), (i) unless such indictment otherwise meets the requirements of this clause 7.01(n) and (ii) until more than thirty (30) days have expired since the commencement of such indictment during which period the Investment Manager has failed to cure such indictment. For purposes of this clause (ii), an indictment against no more than two such officers or employees will be deemed to be cured if the Investment Manager removes responsibility for the management of the Collateral from such officers or employees of the Investment Manager that are the subject of the applicable indictment;

(r) any agreement between the Borrower and the Investment Manager ceases to be in full force and effect, except to the extent that failure of any such agreement to be in full force and effect, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;

(s) the Investment Manager is subject to a Change in Control;

(t) the Investment Manager or any of its Affiliates ceases to act at any time as the investment manager, or in a similar capacity, for the Borrower; and

(u) the registration of the Borrower as an investment company with the SEC shall be suspended, revoked or terminated for any reason.

If an Event of Default has occurred, then the Bank may by written notice to the Borrower (except that no such notice shall be required in the case of an Act of Insolvency) declare the principal of, and the accrued interest on, all outstanding Margin Loans to be forthwith due and payable and thereupon all outstanding Margin Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all accrued Commitment Fees and all other amounts payable under the Margin Loan Documents without further demand, presentment, protest or notice of any kind (an “Acceleration”).

SECTION 7.02. Sale of Collateral.

(a) If an Acceleration shall have occurred and be continuing, the Bank shall to the extent permitted by law have the right to sell and take other action as to any Collateral at a public or private sale, or in any other manner, at such prices and on such terms as the Bank in good faith considers commercially reasonable. Any notification of a sale or other disposition of such Collateral required to be given by the Bank to the Borrower pursuant to the UCC or under the laws of any other applicable jurisdiction shall be given personally or mailed (by certified mail) to the Borrower at the address set forth in Annex B prior to the date such sale or other disposition will be made.

(b) Any proceeds that the Bank receives from the sale or disposition of Collateral, after deducting the costs and expenses of disposition, shall be applied to the Secured Obligations, in such manner as the Bank shall determine. If a surplus of such proceeds remains after payment in full of the Secured Obligations, the Bank shall pay such surplus to the Borrower or the Borrower’s successors.

(c) The Borrower and the Bank agree that (i) the Bank shall not be entitled to exercise its remedies hereunder in a manner that would cause it to become at any one time the beneficial owner of more than 9.9% of any class of any equity security which is registered pursuant to Section 12 of the Exchange Act (“Section 12”); (ii) the Bank will not knowingly sell or otherwise dispose of any securities pledged as Collateral in a manner that would result in any Person becoming the beneficial owner of more than 9.9% of any class of any equity security which is registered pursuant to Section 12; and (iii) the Bank will not sell, in any single transaction, to one or more purchasers, more than 9.9% of any class of any equity security which is registered pursuant to Section 12. The Borrower hereby (x) acknowledges that selling or otherwise disposing of the Collateral in accordance with the restrictions set forth in this Section 7.02(c) may result in prices and terms less favorable to the Bank than those that could be obtained by selling or otherwise disposing of securities pledged as Collateral in a single transaction to a single purchaser and (y) agrees and acknowledges that no method of sale or other disposition of securities pledged as Collateral shall be deemed commercially unreasonable because of any action taken or not taken by the Bank to comply with such restrictions.

(d) In addition to the rights and remedies specified in this Section 7.02 (subject to cause (c) above), the Bank shall have all of the rights and remedies with respect to the Collateral of a “secured party” under the UCC (whether or not the UCC is in effect in the jurisdiction where any rights and remedies under this Agreement may be asserted).

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Confidentiality. The Bank agrees that it shall maintain the confidentiality of any Confidential Information received from the Borrower, including without limitation the existence of any Eligible Securities and any Collateral and other credit support and documentation related thereto and agrees not to disclose such information to any person for any reason except (i) to its Representatives to the extent any such Person has a need to know such Confidential Information (it being understood that the Persons to whom such disclosure is made will first be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (ii) as required or requested by any Law or by any Governmental Authority; (iii) in connection with an examination, audit or similar investigation undertaken by a Governmental Authority or the Bank’s auditors; (iv) in connection with the exercise of any remedies hereunder or under any other Margin Loan Document or any suit, action or proceeding relating to this Agreement or any other Margin Loan Document or the enforcement of rights hereunder or thereunder; (v) subject to an agreement containing provisions substantially the same as those of this Section 8.01, to (A) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary and its obligations; (vi) with the prior written consent of the Borrower; or (vii) to the extent such Confidential Information (A) becomes publicly available other than as a result of a breach of this Section 8.01 or (B) becomes available to the Bank on a non-confidential basis from a source other than the

Borrower or any Subsidiary or any of its Representatives. Notwithstanding anything to the contrary in this Section 8.01, the Bank is hereby permitted to disclose to a U.S. Federal Reserve Bank any information necessary to effect an assignment or pledge of its rights under this Agreement to such U.S. Federal Reserve Bank, as contemplated by Section 8.06 of this Agreement.

SECTION 8.02. Right of Setoff. If an Event of Default shall have occurred and be continuing, the Bank and each of its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Bank or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Margin Loan Document to the Bank, irrespective of whether or not the Bank shall have made any demand under this Agreement or any other Margin Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office holding such deposit or obligation on such indebtedness. The rights of the Bank and its Affiliates under this Section 8.02 are in addition to other rights and remedies (including the right of setoff) that the Bank or its Affiliates may have. The Bank agrees to notify the Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.03. Netting Contract. It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of FDICIA and each payment entitlement and payment obligation hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as the Borrower is not a “financial institution” as that term is defined in FDICIA).

SECTION 8.04. Notices. Except as otherwise provided herein, all notices and other communications by the Bank and the Borrower hereunder shall be in writing (including, without limitation, notice by email) and shall be given to the relevant party at its address or email address set out in Annex B, or such other address or email address as such party may hereafter specify by notice to the other party, given by courier, by United States certified or registered mail, by email or by other telecommunications device capable of creating a written record of such notice and its receipt.

SECTION 8.05. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York. Each of the parties hereto hereby submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in the Borough of Manhattan in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby and to the jurisdiction of any other court located elsewhere as the Bank may select to enforce any judgment hereunder. Each of the parties hereto hereby irrevocably waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. EACH OF THE PARTIES WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 8.06. Binding Effect; Assignment.

(a) This Agreement and any Margin Loans hereunder shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. The rights and obligations of the parties under this Agreement and under any Margin Loan shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other party shall be null and void.

(b) Notwithstanding the foregoing, the Bank may at any time assign to one or more banks or other financial institutions (each, an “Assignee”) all or any pro rata portion of its rights and obligations under this Agreement and any Margin Loan, and any such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in the form approved by the Bank and executed by such Assignee and the Bank, with (and subject to) the subscribed consent of the Borrower, which shall not be unreasonably withheld or delayed; provided, however, that (i) if any such Assignee is an Affiliate of the Bank, no consent shall be required and (ii) if any Event of Default under this Agreement has occurred and is continuing, no consent of the Borrower to such assignment shall be required. Notwithstanding the foregoing, any such Assignee shall not be entitled to receive any greater payment under Article III hereof than the Bank would have been entitled to receive with respect to the rights assigned.

(c) The Bank (including its successors and permitted assigns) may, without regard to the foregoing restrictions on assignment contained in this Section 8.06, assign all or any pro rata portion of its rights under this Agreement to a U.S. Federal Reserve Bank, provided that no such assignment shall release the Bank from any of its obligations hereunder.

(d) The Bank may at any time, without the consent of, or notice to the Borrower, sell participations to any Person (other than the Borrower or any its Affiliates) (each, a “Participant”) in all or a portion of the Bank’s rights and obligations under this Agreement; provided that no such sale of a participation shall release the Bank from any of its obligations hereunder.

(e) If the Bank (or its successors or assignees, as applicable) sells a participation, it shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in any obligations under this Agreement or any other Margin Loan Document (the “Participant Register”); provided that such Person shall not have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under this Agreement or any other Margin Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error and the Person whose name is recorded in the Participant Register as the owner of such participation shall be treated as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

SECTION 8.07. Integration of Terms. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersede all prior or contemporaneous agreements or understandings, whether written or oral, with respect thereto.

SECTION 8.08. No Oral Amendment. Except as provided in Section 1.02, this Agreement may be amended or otherwise modified or supplemented only by an instrument in writing executed by the parties hereto.

SECTION 8.09. Counterparts. This Agreement may be executed by the Borrower and the Bank in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. The words “execution,” “signed,” and “signature” shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act.

SECTION 8.10. Patriot Act. The Bank hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify, and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Patriot Act.

SECTION 8.11. Cost and Expenses; Indemnification. The Borrower agrees to pay to the Bank, and any other holder of any Secured Obligations outstanding hereunder, all documented costs and expenses reasonably incurred or paid by the Bank or any such holder, including reasonable and documented attorneys’ fees and disbursements and court costs, in connection with any Default or Event of Default hereunder or in connection with the enforcement of any of the Margin Loan Documents (including all such costs and expenses incurred in connection with any proceeding under the Bankruptcy Code or any similar laws involving the Borrower as a debtor thereunder) or the protection of any of the Bank’s rights thereunder. The Borrower further agrees to indemnify the Bank and its Affiliates, and their respective Representatives (each such Person being called an “Indemnitee”) against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable and documented fees and disbursements of counsel for any such Indemnitee and all reasonable and documented expenses of litigation or preparation therefor, whether or not the Indemnitee is a party thereto, or any settlement arrangement arising from or relating to any such litigation) which any of them may pay or incur arising out of or relating to any Margin Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Margin Loan, other than those which arise from the

gross negligence or willful misconduct of the party claiming indemnification. The Borrower, upon demand by the Bank, shall reimburse the Bank for any legal or other expenses (including, without limitation, all reasonable and documented fees and disbursements of counsel for any such Indemnitee) incurred in connection with investigating or defending against any of the foregoing (including any settlement costs relating to the foregoing) except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. To the extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or the other Margin Loan Documents or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Margin Loan or the payment of the Secured Obligations and use of the proceeds thereof. The obligations of the Borrower under this Section shall survive the payment of the Secured Obligations and the termination of this Agreement.

SECTION 8.12. Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

SECTION 8.13. Severability of Provisions. Any provision of any Margin Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 8.14. No Waiver; Remedies Cumulative. No failure on the part of the Bank to exercise, and no delay in exercising, any right, remedy or power hereunder or under any other Margin Loan Document shall preclude any other or future exercise thereof, or the exercise of any other right, remedy or power. Each right and remedy provided herein or in any other Margin Loan Document is cumulative and not exclusive of any other right, remedy or power and may be exercised by the Bank at any time and from time to time.

SECTION 8.15. Centralized Functions. The Bank of New York Mellon Corporation, corporate parent of The Bank of New York Mellon, is a global financial organization that provides services to clients through its affiliates and subsidiaries in multiple jurisdictions (the “BNY Mellon Group”). The BNY Mellon Group may centralize functions, including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, storage, compilation and analysis of customer-related data, and other functions (the “Centralized Functions”) in one or more affiliates, subsidiaries and third-party service providers. Solely in connection with the Centralized Functions, (i) Borrower consents to the disclosure of, and authorizes The Bank of New York Mellon to disclose, information regarding Borrower and its accounts (“Customer-Related Data”) to the BNY Mellon Group and to its third-party service providers who are subject to confidentiality obligations with respect to such information and (ii) The Bank of New York Mellon may store the names and business addresses of Borrower’s employees on the systems or in the records of the BNY Mellon Group or its service providers. In addition, the BNY Mellon Group may aggregate Customer-Related Data with other data collected and/or calculated by the BNY Mellon Group, and the BNY Mellon Group will own all such aggregated data, provided that the BNY Mellon Group shall not distribute the aggregated data in a format that identifies Customer-Related Data with

Borrower. Borrower is authorized to consent to the foregoing and confirms that the disclosure to and storage by the BNY Mellon Group of such information does not violate any relevant data protection legislation. In addition, The Bank of New York Mellon may disclose Customer-Related Data as required by law or at the request of any governmental or regulatory authority.

SECTION 8.16. Resolution Stay Protocols. The parties agree that (a) the terms of each relevant Resolution Stay Protocol, as defined below, are incorporated by reference into and form part of this Agreement; (b) this Agreement shall be deemed a “Protocol Covered Agreement” for all purposes under each relevant Resolution Stay Protocol as so incorporated; and (c) for the purposes of incorporating each relevant Resolution Stay Protocol, each party shall be deemed to be an Adhering Party or Module Adhering Party, as applicable, and each party that has specified in a letter of adherence to a Resolution Stay Protocol that it is a Regulated Entity for the purposes of such Resolution Stay Protocol shall also be deemed to be a Regulated Entity for the purposes of such Resolution Stay Protocol and this Agreement.

For this purpose, the term “Resolution Stay Protocol” means (i) the ISDA 2018 US Resolution Stay Protocol (as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) on July 31, 2018) and (ii) each Jurisdictional Module to, and supplementing, the ISDA Resolution Stay Jurisdictional Modular Protocol, as applicable, in each case to which both parties have adhered (directly or through an agent) on or prior to the date hereof. In the event of any inconsistency between the terms of this Agreement and the terms of any relevant Resolution Stay Protocol, the terms of the relevant Resolution Stay Protocol shall prevail.

[Signature page follows]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.


Borrower:

WESTERN ASSET MIDDLE MARKET INCOME FUND INC.

By:
		Name:
		Title:

Lender:

THE BANK OF NEW YORK MELLON

By:
		Name:
		Title:

By:
		Name:
		Title:

ANNEX A

Certain Definitions

“Acceleration” shall have the meaning specified in Section 7.01.

“Act of Insolvency” means, with respect to the Borrower, (i) the commencement by the Borrower as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or the Borrower seeking the appointment or election of a receiver, conservator, collateral agent, custodian or similar official for itself or any substantial part of its Property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election; (ii) the failure to pay, to become unable, or admit in writing its inability, to pay its debts generally as they become due; (iii) an assignment for the benefit of creditors; (iv) the institution by a third party of any proceeding seeking to have entered against the Borrower an order for relief under the Bankruptcy Code or other similar insolvency laws, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors; (v) the commencement of any such case or proceeding against the Borrower, or any third party seeking the appointment or election of a receiver, conservator, collateral agent, custodian or similar official for the Borrower or any substantial part of the Borrower’s Property; (vi) a determination made by the U.S. Secretary of the Treasury pursuant to Section 203(b) of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 which, in any of the matters described in parts (iv) and (v), (A) is consented to or not timely contested by the Borrower, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days; or (vii) the taking of any corporate, partnership (or equivalent) action in furtherance of any matter described in parts (i) through (vi) above.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For purposes of Section 5.01(m), Affiliate shall have the meaning set forth in Section 223.2 of Regulation W of the Federal Reserve.

“Aggregate Collateral Value” means, with respect to any Margin Loan, at any time of determination, the sum of the Collateral Value of all Eligible Collateral then credited to the Collateral Account that is subject to a perfected first priority Lien and security interest in favor of the Bank for such Margin Loan.

“Aggregate Outstanding Amount” means at any time of determination, the aggregate outstanding principal amount of all then-outstanding Margin Loans.

“Agreement” has the meaning specified in the preamble.

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“Alternative Base Rate” means, for any day, a rate per annum equal to the higher of (i) the Federal Funds Effective Rate in effect on such day plus 0.50% and (ii) the Prime Rate in effect on such day.

“Annual Financial Statements” has the meaning specified in Section 6.03(a).

“Anti-Money Laundering Laws” has the meaning specified in Section 5.01(i).

“Applicable Index Rate” shall mean, for any Margin Loan, USD-OBFR; provided that, if at any time, the Bank determines that (i) such Applicable Index Rate is not published or available, or (ii) use of such Applicable Index Rate becomes unlawful, or (iii) such Applicable Index Rate is no longer widely accepted in the relevant market, or (iv) such Applicable Index Rate has been replaced, or (v) use of such Applicable Index Rate or its publication has been restricted by announcement or other action by the relevant administrator, regulatory supervisor, central bank for the currency, or insolvency or resolution official, authority or court, then Bank and Borrower shall endeavor to establish an alternate rate of interest that gives due consideration to the then prevailing market convention for determining a rate of interest for loans in the United States at such time and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable, and if no alternate rate of interest has been agreed within 2 Business Days of Bank making such determination, then the alternate rate shall be the rate per annum generally accepted in the market as the replacement rate as determined by Bank, in a commercially reasonable manner. Notwithstanding the foregoing, if the Applicable Index Rate for any period as determined above is less than zero, the Applicable Index Rate for such period shall be deemed to be zero.

“Applicable Interest Rate” means the Applicable Index Rate plus the Applicable Spread for such period.

“Applicable Spread” means [ ]per annum.

“Article 8” has the meaning specified in Section 4.01.

“Assignee” has the meaning specified in Section 8.06(b).

“Bank” has the meaning specified in the preamble.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

“Borrowing Date” has the meaning specified in Section 1.02(a).

“Borrower” has the meaning specified in the preamble.

“Breakage Amount” with respect to Section 2.09 means such loss, cost or expense to the Bank including, but not limited to, the amount determined by the Bank to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Margin Loan had such event not occurred (based on the Applicable Interest Rate that would have been applicable to such Margin Loan and the time remaining to maturity from the date on which

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such event occurred), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate that major financial institutions are bidding in the interbank market, at the commencement of such period, for deposits in U.S. Dollars of a comparable amount and period from other banks in the market.

“Business Day” means any day, other than a Saturday or Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

“Change in Control” means, with respect to the Investment Manager, (i) the approval by the directors, shareholders or managers of the Investment Manager of a merger or consolidation of the Investment Manager with any other corporation or entity (other than an Affiliate of the Investment Manager); or (ii) the approval by the directors, shareholders or managers of the Investment Manager of a plan of complete liquidation of the Investment Manager or an agreement for the sale or disposition by the Investment Manager of all or substantially all of its assets (other than sales of assets in the ordinary course of business and dispositions of assets to an Affiliate of the Investment Manager).

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Governmental Authority.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Collateral” means the Collateral Account and any Property, including all Eligible Collateral, from time to time credited thereto.

“Collateral Account” means, with respect to each Margin Loan, each of (i) any securities account established and maintained by the Bank in its capacity as securities intermediary (as defined in Article 8) in the name of the Borrower for the purpose of holding Collateral for such Loan, (ii) any deposit account (as such term is defined in the UCC) established and maintained by the Bank in the name of the Borrower for the purpose of holding Collateral for such Loan; (iii) any account maintained by the Bank in the name of the Borrower for the purpose of holding Collateral for such Loan at any other depository, book-entry system or clearing agency (and their respective successors and assigns) authorized to act as a securities depository, book-entry system or clearing agency, pursuant to applicable law, and any successor account thereto, any replacement account thereof and any other accounts relating thereto and, in each case, held in a sub-account on the books and records of the Bank in the name of the Borrower and (iv) to the extent not otherwise included in any of the foregoing, any account of the Bank maintained at any securities intermediary (as defined in Article 8), depository, book-entry system or clearing agency, including without limitation The Depository Trust Company, to the extent it holds property of or from the Borrower (including any security entitlement (within the meaning of Article 8) to such property) in respect of such Loan.

“Collateral Value” means, at any time, with respect to any item of Eligible Collateral then credited to the Collateral Account and subject to a Lien and security interest in favor of the Bank, the market value of such Eligible Collateral at the close of business on the previous Business Day, as determined by the Bank, divided by the Margin thereof.

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“Collateral Value Deficit” exists at any time of determination if the Aggregate Collateral Value at such time is less than the Aggregate Outstanding Amount for such Margin Loan at such time.

“Commitment Fee” has the meaning specified in Section 2.03.

“Commitment Fee Payment Date” means each Interest Payment Date.

“Commitment Fee Rate” means [ ]% per annum.

“Confidential Information” means (a) any confidential information relating to the Borrower, a Margin Loan, any Collateral or this Agreement that is disclosed to the Bank or its Representatives by or on behalf of the Borrower (whether prepared or communicated by the Borrower, its Representatives or otherwise), and (b) any Work Product using any of the information described in clause (a) above, but excludes (i) information that was, is or becomes generally available to the public other than as a result of a disclosure by the Bank or any of its Representatives in breach of this Agreement and (ii) information that was within the possession of the Bank or any of its Representatives prior to being furnished to the Bank or its Representatives pursuant hereto or is lawfully obtained by the Bank or any of its Representatives thereafter from a source that, in each case, as far as the Bank or such Representatives are aware, is not, by virtue of such disclosure, in breach of any obligation of confidentiality of such source with respect to such information.

“Custodian” means The Bank of New York Mellon.

“Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Default Rate” means, for any day during which the Default Rate is applicable, the rate per annum equal to the sum of 2.00% and the greater of (i) the then-applicable interest rate and (ii) the Alternative Base Rate; provided, however, that after the Maturity Date of such Margin Loan, the Default Rate shall be the rate per annum equal to the sum of 2.00% and the Alternative Base Rate. Such rate shall be computed on the basis of a 360-day year for the actual number of days the Default Rate is applicable.

“Effective Date” has the meaning specified in the preamble.

“Eligible Collateral” means Eligible Securities and cash.

“Eligible Securities” means, at any time, all of the securities identified on the then-applicable Schedule 1; that Eligible Securities shall not include:

(a) any securities issued by (i) The Bank of New York Mellon Corp.; (ii) any “affiliate” of the Bank, as such term is defined in Section 23A of the Federal Reserve Act of 1913, as amended, or as such term is defined in Rule 144 under the Securities Act of 1933, as amended (“Rule 144”); (iii) the Borrower; or (iv) any “affiliate” of the Borrower, as such term is defined under Rule 144;

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(b) any “restricted security” within the meaning of Rule 144;

(d) as of any date, securities that (i) mature or (ii) will be redeemed or tendered; in each case, within five (5) Business Days of such date.

“Entity” has the meaning specified in Section 5.01(j).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means, when used with respect to a Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans, any Person that is a member of any group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code of which the Borrower is a member.

“Event of Default” has the meaning specified in Section 7.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excess Collateral Value” means, at any time of determination, the amount by which the Aggregate Collateral Value at such time exceeds the Aggregate Outstanding Amount at such time.

“Excluded Security” means (i) any equity security referenced by Section 13(d)(1) of the Exchange Act and (ii) any option to purchase, or security convertible or exchangeable into, representing or carrying a warrant or right to subscribe to, or otherwise representing a right to acquire, any security described in clause (i).

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

“FDICIA” means the Federal Deposit Insurance Corporation Improvement Act of 1991, as amended.

“Federal Reserve” has the meaning specified in Section 1.03.

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“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded, if necessary, to the next greater 1/100 of 1%) equal to (a) the weighted average of the rates for transactions in U.S. Dollar Federal funds as published the next succeeding Business Day on the FEDFUNDS Page or (b) if the rate referred to in clause (a) does not appear on the FEDFUNDS Page or is not so published by 3:00 p.m., New York City time, on such day, the rate for transaction in overnight U.S. Dollar Federal funds as published on the next succeeding Business Day in Federal Reserve Publication H.15 (519) under the caption “Federal Funds (Effective),” or (c) if the rate referred to in clause (b) is not so published by 3:00 p.m., New York City time, the rate calculated by the Bank as the arithmetic mean of the weighted average rate for the transactions in overnight U.S. Dollar Federal funds arranged by four leading brokers in New York City, selected by the Bank on the next succeeding Business Day. In the event the information required to calculate the Federal Funds Effective Rate is not available on a given Business Day, the Federal Funds Effective Rate for such Business Day shall be deemed to be the Federal Funds Effective Rate for the preceding Business Day.

“FEDFUNDS Page” means the display designated as “FEDFUNDS Page” on the Reuters Service (or such other page as may replace the FEDFUNDS Page on that service).

“Financial Contract Liabilities” means, with respect to the Borrower at any time, the liability of such Borrower in respect of each Financial Contract of the Borrower.

“Financial Contracts” means (a) any rate, basis, commodity, currency, debt, equity or other swap or swaption, (b) any put, cap, collar or floor agreement, (c) any rate, basis, commodity, currency, debt, equity or other futures or forward agreement, (d) any rate, basis, commodity, currency, debt, equity or other option, (e) any derivative, (f) any financial instrument whose value is derived from the value of something else, (g) any contract under which the parties agree to payments between or among them based upon the value of an underlying asset or other data at a particular point or points in time, (h) any “swap agreement” within the meaning of Section 101(53B) of the Bankruptcy Code of the United States, (i) any foreign currency contract, repurchase agreement, reverse repurchase agreement, dollar roll, credit-linked note, indexed security, collateralized debt obligation, firm or standby commitment agreement, securities lending agreement, or when-issued contract, and (j) any other similar arrangement.

“Fundamental Policies” means, collectively, (i) the policies and objectives for, and limits and restrictions on, investing by the Borrower set forth in its prospectus as in effect on the Effective Date and which may be changed only by a vote of a majority of the Borrower’s outstanding voting securities (as defined in Section 2(a)(42) of the Investment Company Act), and (ii) all policies limiting the incurrence of indebtedness by the Borrower set forth in its prospectus as in effect on the date the Agreement is entered into.

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

A-6

“Governmental Authority” means, with respect to any Person, the government of the United States or any other nation, or if any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies) having jurisdiction or authority over such Person.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by or otherwise in respect of bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (h) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (i) all Financial Contract Liabilities of such Person, (j) all obligations of such Person in respect of Senior Securities Representing Indebtedness, and (k) all guarantees by such Person of any of the foregoing. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnitee” has the meaning specified in Section 8.11.

“Interest Payment Date” means the first Business Day of each calendar month, commencing on the first such date to occur after the Borrowing Date.

“Interest Period” means, with respect to a Margin Loan, each period from and including the first day of a calendar month to and including the last day of such month; provided that the initial Interest Period shall start on (and include) the Borrowing Date applicable to such Margin Loan, and the final Interest Period shall end on (and exclude) the Maturity Date.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Manager” means Western Asset Management Co., a limited liability company organized under the laws of California.

“IRS” means the United States Internal Revenue Service.

“Law” means, with respect to any Person, collectively, all international, foreign, U.S. federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof applicable to such Person, and all applicable administrative orders, directed duties, requests, licenses, authorizations, requirements and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

A-7

“Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any conditional sale or other title retention agreement, any financing or similar statement, or notice filed under the UCC or other similar recording or notice statute, and any lease in the nature thereof).

“Margin” with respect to each Eligible Security at any time, the Margin specified for such item of Eligible Collateral in the then-applicable Schedule 1; provided that the Margin for any item of Eligible Collateral that is “margin stock” (as defined in Regulation U of the Federal Reserve) shall be no less than 200%.

“Margin Loan” has the meaning specified in Section 1.01.

“Margin Loan Commitment Amount” means U.S. $35,000,000.

“Margin Loan Documents” means this Agreement, each Borrowing Notice and each other instrument or document delivered hereunder or thereunder or otherwise in connection therewith.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition or Property of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under any Margin Loan Document, (c) the validity or enforceability of any Margin Loan Document or (d) the rights and remedies of the Bank hereunder and thereunder.

“Maturity Date” means the Original Maturity Date; provided, however, that so long as no Event of Default has occurred and is continuing, on any Business Day on which the number of calendar days from such Business Day to (but excluding) the then current Maturity Date is less than 180, the Maturity Date shall be automatically extended so that the new Maturity Date is the 180^th calendar day following such Business Day (provided that if such 180^th calendar day is not a Business Day, the new Maturity Date shall be the immediately following Business Day) until either the Borrower or the Lender, as the case may be, provides to the other party hereto written notice of its intention to terminate the Margin Loan Facility (a “Termination Notice”). In the event a Termination Notice is provided, the Maturity Date shall cease to extend.

“Minimum Transfer Amount” means USD 250,000.

“Modified Following Business Day Convention” means, for any Interest Payment Date, other than the Maturity Date, if such date would otherwise fall on a day that is not a Business Day, then such date will be postponed to the next day that is a Business Day, except that, if the next Business Day falls in the next calendar month, then such date will be advanced to the immediately preceding day that is a Business Day.

A-8

“OBFR01 Page”, the display page designated as “OBFR01” on the Bloomberg Service (or such other page as may replace that page on that service, or such page or replacement thereof on any successor service).

“OFAC Event” has the meaning specified in Section 6.09(b).

“Original Maturity Date” means November 7, 2022.

“Participant” has the meaning specified in Section 8.06(d).

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“Permitted Indebtedness” means:

(a) Indebtedness under the Margin Loan Documents;

(b) Indebtedness (other than Indebtedness for borrowed money) constituting Financial Contract Liabilities (1) incurred in the ordinary course of business and (2) permitted to be incurred in accordance with its Fundamental Policies; and

(c) Indebtedness to its Custodian incurred for the purposes of clearing and settling purchases and sales by such Borrower of securities, (1) for temporary or emergency purposes of such Borrower, or (2) related to any foreign exchange transactions to which such Borrower is a party.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” means an employee benefit plan, other than a Multiemployer Plan, (i) which is maintained for employees of the Borrower, any Subsidiary or any ERISA Affiliate and which is subject to Title IV of ERISA or (ii) with respect to which the Borrower, any Subsidiary or any ERISA Affiliate could be subjected to any liability under Title IV of ERISA (including Section 4069 of ERISA). Without limitation on the foregoing, the term “Plan” includes any employee benefit plan for which the Borrower or any of its Subsidiaries may have any liability arising from the joint and several liability provisions of Title IV of ERISA, from the maintenance or participation in any such plan by the Borrower or any of its Subsidiaries, as a result of the Borrower or any of its Subsidiaries being the successor in interest to any person maintaining or participating in any such plan or otherwise.

“Prepayment Date” means the specified date of prepayment in the applicable Prepayment Notice.

A-9

“Prepayment Notice” means a notice specifying (i) the date of prepayment; (ii) the applicable Margin Loans to be prepaid; (iii) the principal amount of Margin Loans to be prepaid; and (iv) the total amount of the prepayment (the “Prepayment Amount”). For purposes of this definition, the Prepayment Amount shall include (i) the principal amount of Margin Loans to be prepaid, (ii) any accrued and unpaid interest on such principal amount and (iii) any amount payable pursuant to Section 2.09.

“Prime Rate” means, for any day, the prime commercial lending rate of the Bank as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change.

“Prohibited Transaction” means a transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA.

“Property” means any interest in any kind of property or asset, whether real, personal, or mixed, or tangible or intangible.

“Representatives” means, with respect to any Person, its Affiliates and the directors, officers, employees, agents, advisors, counsel and auditors of such Person and of such Person’s Affiliates.

“Responsible Officer” means, with respect to any Person, the chief executive officer, president, chief financial officer, controller, assistant controller, treasurer or assistant treasurer of such Person.

“Sanctions” means any economic or trade sanctions or trade embargos enacted, administered, imposed or enforced by: (a) the United States government; (b) the United Nations Security Council; (c) the European Union or its Participating Member States; or (d) the United Kingdom.

“Sanctioned Country” has the meaning specified in Section 5.01(j).

“Sanctioned Entity” has the meaning specified in Section 5.01(j).

“SEC” means the U.S. Securities and Exchange Commission.

“Section 12” has the meaning specified in Section 7.02(c).

“Secured Obligations” has the meaning specified in Section 4.02.

“Subsidiary” means, with respect to any Person, any other Person (a) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (b) which does not have outstanding shares or securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions for such other Person is, now or hereafter, owned or controlled, directly or indirectly, by such Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists.

A-10

“Tax Deduction” means a deduction or withholding for or on account of Taxes from a payment made by the Borrower to the Bank under this Agreement.

“Tax Payment” means any increase in payment made by the Borrower to the Bank under Section 2.09(a).

“Taxes” means all present and future taxes, levies, imposts, deductions, withholdings, duties, filing and other fees or charges, other than taxes imposed on the overall net income of the Bank, franchise taxes, branch profits taxes, in each case, imposed as a result of Bank being organized under the laws of, or having its principal office or applicable lending office located in the jurisdiction imposing such tax (or any political subdivision thereof).

“UCC” means the Uniform Commercial Code as now and hereafter in effect in the State of New York, or any successor statute.

“USD,” “U.S. Dollars” or “$” means the lawful currency of the United States of America.

“USD-OBFR” as of any day, the Overnight Bank Funding Rate (a volume-weighted median measure of US dollar funding costs for US based banks calculated using both fed funds transactions and O/N eurodollar time deposits), which appears on the OBFR01 Page as of approximately 8:00 a.m. (New York City time) on the day that is one (1) Business Day preceding such day. If such day is not a Business Day, OBFR for such day shall be OBFR as of the immediately preceding Business Day. If OBFR does not appear on the OBFR01 Page, OBFR for such day will be determined by such other source as agreed by the parties; provided that if the parties do not agree on such other source to determine OBFR within 2 Business Days, OBFR for such day will be determined by Bank in a commercially reasonable manner. Notwithstanding the foregoing, if OBFR for any day as determined above is less than zero, OBFR for such day shall be deemed to be zero.

“Work Product” means all memoranda, notes and other documents and analyses developed by the Bank or its Representatives based upon and containing Confidential Information.

A-11

ANNEX B

Notice and Account Details

The Borrower or the Bank may update the notice and account details in this annex at any time by written notice to the other party.

Account Details:

Bank: BNY Mellon

ABA#: 021-000-018

Address: 240 Greenwich St.

New York, NY 10286

Account Number: GLA/111-231

Account Name: Western Asset Middle Market Income Fund Inc.

Reference: FranklinTempleton

Notice Details

If to the Borrower:

Western Asset Middle Market Income Fund Inc.

c/o Legg Mason Partners Fund Advisor, LLC

620 Eighth Avenue, 47h Floor

New York, New York 10018

Telephone: 203-703-7026/212-805-3488

Facsimile: N/A / 646-502-7723

Attention: George Hoyt/Raymond Lui

Email: George.Hoyt@franklintempleton.com

Raymond.Lui@franklintempleton.com

LMCEFundOPS@franklintempleton.com

If to the Bank:

The Bank of New York Mellon

240 Greenwich St.

New York, NY 10286

Attention: Loan Desk – Credit Department

Telephone no.:

E-mail:

with a copy to:

The Bank of New York Mellon

240 Greenwich St.., 4^th Floor

New York, NY 10286

Attention: STL Desk – Steve Brennan

Telephone no.: 212-815-2270

E-mail: sfprincipaltraders@bnymellon.com

B-2

SCHEDULE 1: Eligible Collateral and Margin


Categories		Margin Percentage
1. Investment Grade US Corporate Bonds		[ ]%

2. High Yield US Corporate Bonds		[ ]%

Constraints applicable to all Bonds:

•

Maximum of any issuance – [ ]

•

Maximum of any issuance posted as collateral – [ ]%¹

•

Maximum from any single sector: [ ]%¹

•

Maximum amount of PIK Bonds: [ ]%

•

Maximum of CCC+/CCC1 or below rated (or unrated): [ ]%¹

•

Maximum defaulted bonds: [ ]%¹

¹	Percentage measured by the Collateral Value of the type of collateral described, divided by the Collateral Value of all collateral posted.

EXHIBIT A

[FORM OF BORROWING NOTICE]

From:

Western Asset Middle Market Income Fund Inc.

c/o Legg Mason Partners Fund Advisor, LLC

620 Eighth Avenue, 47h Floor

New York, New York 10018

Telephone: 203-703-7026/212-805-3488

Facsimile: N/A / 646-502-7723

Attention: George Hoyt/Raymond Lui

Email: George.Hoyt@franklintempleton.com

Raymond.Lui@franklintempleton.com

LMCEFundOPS@franklintempleton.com

To:	The Bank of New York Mellon

Re:	Borrowing Notice

Date:

[INSERT DATE]

In accordance with Section 1.02 of the Master Margin Loan Agreement dated as of [DATE] between Western Asset Middle Market Income Fund Inc. (“Borrower”) and The Bank of New York Mellon (“Bank”), Borrower hereby irrevocably notifies Bank of its desire to receive a Margin Loan in the Principal Amount and on the Borrowing Date specified below.

Principal Amount:

Borrowing Date:

Executed by the Borrower as of the date specified above.


[NAME OF BORROWER]

By:
		Name: Title:

EX-FILING FEES 6 d293633dexfilingfees.htm EX-FILING FEES EX-FILING FEES

Exhibit (i)

Calculation of Filing Fee Tables

Schedule TO

(Form Type)

Western Asset Middle Market Income Fund Inc.

(Exact Name of Registrant as Specified in its Charter)

Table 1: Transaction Valuation



	Transaction Valuation	Fee rate	Amount of Filing Fee

Fees to Be Paid	$2,248,469	0.00927%	$208.43

Fees Previously Paid	$0.00		$0.00

Total Transaction Valuation	$2,248,469

Total Fees Due for Filing			$208.43

Total Fees Previously Paid			$0.00

Total Fee Offsets			$0.00

Net Fee Due			$208.43

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