EXHIBIT k.3
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FORM OF AUCTION AGENCY AGREEMENT
dated as of [ ______________ ]
Relating to
Auction Preferred Shares
Series A, Series B, Series C,
Series D and Series E
Of
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of May ___
is between ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund (the "Fund") and
Deutsche Bank Trust Company Americas, a New York banking corporation.
The Fund proposes to issue an aggregate of ______ preferred shares, par
value $0.00001 per share, liquidation preference $25,000 per share, designated
as Auction Preferred Shares, Series A, Auction Preferred Shares, Series B,
Auction Preferred Shares, Series C, Auction Preferred Shares, Series D, and
Auction Preferred Shares, Series E (the "Preferred Shares"), pursuant to the
Fund's Second Amended and Restated Bylaws (as defined below).
The Fund desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction (as defined below) of
Preferred Shares (in such capacity, the "Auction Agent"), and as the transfer
agent, registrar, dividend paying agent and redemption agent with respect to the
Preferred Shares (in such capacity, the "Paying Agent"), upon the terms and
conditions of this Agreement, and the Fund hereby appoints Deutsche Bank Trust
Company Americas as said Auction Agent and Paying Agent in accordance with those
terms and conditions (hereinafter generally referred to as the "Auction Agent,"
except in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Second Amended and Restated
Bylaws.
Capitalized terms used herein but not defined herein shall have the
respective meanings specified in the Second Amended and Restated Bylaws.
1.2 Certain Defined Terms.
As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:
(a) "Agent Member" shall mean a member of the Securities
Depository that will act on behalf of a Beneficial Owner of one or more
Preferred Shares or on behalf of a Potential Beneficial Owner.
(b) "Auction" shall have the meaning specified in Section 2.1
hereof.
(c) "Auction Procedures" shall mean the procedures as from time
to time in effect for conducting Auctions that are set forth in Section 11.10 of
the Second Amended and Restated Bylaws.
(d) "Authorized Officer" shall mean each Managing Director, Vice
President, Assistant Vice President and Associate of the Auction Agent and every
other officer or employee
of the Auction Agent assigned to its Corporate Trust & Agency Services and
designated as an "Authorized Officer" for purposes hereof in a written
communication from the Auction Agent to the Fund.
(e) "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a Broker-Dealer substantially in the form attached hereto
as Exhibit A.
(f) "Closing" shall mean the date the Fund consummates the
transactions for the issuance and sale of the Preferred Shares.
(g) "Fund Officer" shall mean the Chairman, the President, each
Vice President (whether or not designated by a number or word or words added
before or after the title "Vice President"), the Secretary, the Treasurer, each
Assistant Secretary and each Assistant Treasurer of the Fund and every other
officer or employee of the Fund designated as a "Fund Officer" for purposes
hereof in a notice from the Fund to the Auction Agent.
(h) "Holder" shall be a holder of record of one or more
Preferred Shares, listed as such in the Share Register.
(i) "Second Amended and Restated Bylaws" shall mean the Second
Amended and Restated Bylaws of the Fund in effect at the time the Registration
Statement relating to the Preferred Shares is declared effective by the
Securities and Exchange Commission, specifying the powers, preferences and
rights of the Preferred Shares.
(j) "Settlement Procedures" shall mean the Settlement Procedures
attached as Exhibit A to the Broker-Dealer Agreement.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience
of reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be
to New York City time.
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II. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Board of Trustees of the Fund has adopted a resolution
appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes of
the Auction Procedures. The Auction Agent hereby accepts such appointment and
agrees that, on each Auction Date, it shall follow the procedures set forth in
this Section 2 and the Auction Procedures for the purpose of determining the
Applicable Rate for the Preferred Shares for the next Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures
and in the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if such
provisions were set forth fully herein.
2.2 Preparation for Each Auction; Maintenance of Registry of Existing
Holders.
(a) As of the date hereof, the Fund shall provide the Auction
Agent with a list of the Broker-Dealers previously approved by the Auction Agent
and shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer. The
Auction Agent shall keep such list current and accurate and shall indicate
thereon, or on a separate list, the identity of each Existing Holder, if any,
whose most recent Order was submitted by a Broker-Dealer on such list and
resulted in such Existing Holder continuing to hold or purchase Preferred
Shares. Not later than five Business Days prior to any Auction Date for which
any change in such list of Broker-Dealers is to be effective, the Fund shall
notify the Auction Agent in writing of such change and, if any such change is
the addition of a Broker-Dealer to such list, the Fund shall cause to be
delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent shall
have entered into a Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice referred to in
clause (vii) of paragraph (a) of the Settlement Procedures, the Auction Agent,
by such means as the Auction Agent reasonably deems practicable, shall give
notice of such change to the Broker-Dealers not later than the earlier of 9:15
a.m. on the new Auction Date or 9:15 a.m. on the old Auction Date.
(c) The provisions contained in Section 11.2 of the Second
Amended and Restated Bylaws concerning Special Dividend Periods and the
notification of a Special Dividend Period will be followed by the Fund and, to
the extent applicable, the Auction Agent, and the provisions contained therein
are incorporated herein by reference in their entirety and shall be deemed to be
a part of this Agreement to the same extent as if such provisions were set forth
fully herein.
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(d) (i) On each Auction Date, the Auction Agent shall
determine the Maximum Applicable Rate. Not later than 9:30 a.m. on each Auction
Date, the Auction Agent shall notify the Fund and the Broker-Dealers of the
Maximum Applicable Rate.
(ii) If the Reference Rate is the applicable "AA" Composite
Commercial Paper Rate and such rate is to be based on rates supplied by
Commercial Paper Dealers and one or more of the Commercial Paper Dealers shall
not provide a quotation for the determination of the applicable "AA" Composite
Commercial Paper Rate, the Auction Agent immediately shall notify the Fund so
that the Fund can determine whether to select a substitute Commercial Paper
Dealer or substitute Commercial Paper Dealers to provide the quotation or
quotations not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Fund promptly shall advise the Auction Agent of any such selection.
If the Fund does not select any such substitute Commercial Paper Dealer or
substitute Commercial Paper Dealers, then the rates shall be supplied by the
remaining Commercial Paper Dealer or Commercial Paper Dealers.
(e) (i) The Auction Agent shall maintain a current registry of
the Existing Holders of the Preferred Shares who are Broker-Dealers for purposes
of each individual Auction. The Fund shall use commercially reasonable efforts
to provide or cause to be provided to the Auction Agent within ten Business Days
following the date of the Closing a list of the initial Existing Holders of
Preferred Shares, and the Broker-Dealer of each such Existing Holder through
which such Existing Holder purchased such shares. The Auction Agent may rely
upon, as evidence of the identities of the Existing Holders, such list, the
results of each Auction and notices from any Existing Holder, the Agent Member
of any Existing Holder or the Broker-Dealer of any Existing Holder with respect
to such Existing Holder's transfer of any Preferred Shares to another Person.
(ii) In the event of any partial redemption of Preferred
Shares, upon notice by the Fund to the Auction Agent of such partial redemption,
the Auction Agent promptly shall request the Securities Depository to notify the
Auction Agent of the identities of the Agent Members (and the respective numbers
of shares) from the accounts of which shares have been called for redemption and
the person or department at such Agent Member to contact regarding such
redemption. At least two Business Days prior to the Auction preceding the date
of redemption, the Auction Agent shall request each Agent Member so identified
to disclose to the Auction Agent (upon selection by such Agent Member of the
Existing Holders whose shares are to be redeemed) the number of Preferred Shares
of each such Existing Holder, if any, to be redeemed by the Fund, provided that
the Auction Agent has been furnished with the name and telephone number of a
person or department at such Agent Member from which it is to request such
information. In the absence of receiving any such information with respect to an
Existing Holder, from such Existing Holder's Agent Member or otherwise, the
Auction Agent may continue to treat such Existing Holder as having ownership of
the number of Preferred Shares shown in the Auction Agent's registry of Existing
Holders.
(iii) The Auction Agent shall register a transfer of the
ownership of Preferred Shares from an Existing Holder to another Existing
Holder, or to another Person if permitted by the Fund, only if (A) such transfer
is made pursuant to an Auction or (B) if such
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transfer is made other than pursuant to an Auction, the Auction Agent has been
notified of such transfer in writing, in a notice substantially in the form of
Exhibit C to the Broker-Dealer Agreement, by such Existing Holder or by the
Agent Member of such Existing Holder. The Auction Agent is not required to
accept any notice of transfer delivered for an Auction unless it is received by
the Auction Agent by 12:00 noon of the Auction Date. The Auction Agent shall
rescind a transfer made on the registry of the Existing Holders of any Preferred
Shares if the Auction Agent has been notified in writing, in a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement, by the
Agent Member or the Broker-Dealer of any Person that (i) purchased any Preferred
Shares and the seller failed to deliver such shares or (ii) sold any Preferred
Shares and the purchaser failed to make payment to such Person upon delivery to
the purchaser of such shares.
(f) The Auction Agent may request that the Broker-Dealers, as
set forth in Section 3.2(c) of the Broker-Dealer Agreement, provide the Auction
Agent with a list of their respective customers that such Broker-Dealers believe
are Beneficial Owners of Preferred Shares. The Auction Agent shall keep
confidential any such information and shall not disclose any such information so
provided to any Person other than the relevant Broker-Dealer and the Fund,
provided that the Auction Agent reserves the right to disclose any such
information if it is advised by its counsel that its failure to do so would be
unlawful.
2.3 Auction Schedule.
Subject to Article 11 of the Second Amended and Restated Bylaws, the
Auction Agent shall normally conduct Auctions weekly (usually Monday for Series
A, Tuesday for Series B, Wednesday for Series C, Thursday for Series D and
Friday for Series E) in accordance with the schedule set forth below. Such
schedule may be changed by the Auction Agent with the consent of the Fund, which
consent shall not be withheld unreasonably. The Auction Agent shall give notice
of any such change to each Broker-Dealer. Such notice shall be received prior to
the first Auction Date on which any such change shall be effective.
Time Event
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By 9:30 a.m. Auction Agent shall advise the Fund and
the Broker-Dealers of the Reference Rate
and the Maximum Applicable Rate as set
forth in Section 2.2(d)(i) hereof.
9:30 a.m. - 1:00 p.m. Auction Agent shall assemble information
communicated to it by Broker-Dealers as
provided in Section 11.10(c) of the Second
Amended and Restated Bylaws. Submission
deadline is 1:00 p.m.
Not earlier than 1:00 p.m. Auction Agent shall make determinations
pursuant to Section 11.10(d)(i) of the
Second Amended and Restated Bylaws.
By approximately 3:00 p.m. Auction Agent shall advise the Fund of the
results of the Auction as provided in
Section 11.10(d)(ii) of the
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Second Amended and Restated Bylaws.
Submitted Bid Orders and Submitted Sell
Orders will be accepted and rejected in
whole or in part and Preferred Shares will
be allocated as provided in Section
11.10(e) of the Second Amended and
Restated Bylaws.
Auction Agent shall give notice of the
Auction results as set forth in Section
2.4 hereof.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid or
Sell Order in an Auction whether such Bid or Sell Order was accepted or rejected
in whole or in part and of the Applicable Rate for the next Dividend Period for
the related Preferred Shares by telephone or through its Auction Processing
System as set forth in paragraph (a) of the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 3:00 P.M. on each Dividend Payment Date, the
Auction Agent after each Auction will pay a service charge from funds provided
by the Fund to each Broker-Dealer on the basis of the purchase price of
Preferred Shares placed by such Broker-Dealer at such Auction. The service
charge shall be (i) in the case of any Auction Date immediately preceding a
7-day Dividend Period, the product of (A) a fraction the numerator of which is
the number of days in such Dividend Period (calculated by counting the first day
of such Dividend Period but excluding the last day thereof) and the denominator
of which is 365, times (B) 1/4 of 1%, times (C) $25,000 times (D) the sum of (I)
the aggregate number of Preferred Shares placed by the Broker-Dealer in the
applicable Auction that either (x) the subject of a Submitted Bid of a
Beneficial Owner submitted by the Broker-Dealer and continued to be held as a
result of such submission or (y) the subject of a Submitted Bid of a Potential
Beneficial Owner submitted by the Broker-Dealer and were purchased as a result
of such submission plus (II) the aggregate number of Preferred Shares subject to
valid Hold Orders (determined in accordance with Section 11.10(b) of the Second
Amended and Restated Bylaws) submitted to the Auction Agent by the Broker-Dealer
plus (III) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 11.10(b) of the Second Amended and
Restated Bylaws that were acquired by the Broker-Dealer for its own account or
were acquired by such Beneficial Owners through the Broker-Dealer; and (ii) in
the case of any Special Dividend Period the amount determined by mutual consent
of the Fund and any such Broker-Dealer or Broker-Dealers and shall be based upon
a selling concession that would be applicable to an underwriting of fixed or
variable rate preferred shares with a similar final maturity or variable rate
dividend period, respectively, at the commencement of the Dividend Period with
respect to such Auction.
(b) The Fund shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than a Broker-Dealer, without
the prior written approval of the Auction Agent,
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which approval shall not be withheld unreasonably. The Fund may designate an
Affiliate or UBS Warburg LLC to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Fund, provided that at
least one Broker-Dealer Agreement would be in effect for the APS after such
termination.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from
time to time shall enter into such Broker-Dealer Agreements as the Fund shall
request.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Ownership of Preferred Shares and Submission of Bids by the Fund
and Its Affiliates.
Neither the Fund nor any Affiliate of the Fund may submit an Order in
any Auction, except that an Affiliate of the Fund that is a Broker-Dealer may
submit an Order. The Fund shall notify the Auction Agent if the Fund or, to the
best of the Fund's knowledge, any Affiliate of the Fund becomes a Beneficial
Owner of any Preferred Shares. Pursuant to the Second Amended and Restated
Bylaws of the Fund, the Fund and the Fund's Affiliates shall be prohibited from
reissuing and its Affiliates (other than an Underwriter) will be prohibited from
transferring (other than to the Fund or pursuant to an Auction) any Preferred
Shares they may acquire. The restrictions in this Section 2.6 shall in no way
limit the activities of the Auction Agent. The Auction Agent shall have no duty
or liability with respect to enforcement of this Section 2.6.
2.7 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund and its agents, independent
public accountants and counsel access at reasonable times during normal business
hours to review and make extracts or copies (at the Fund's sole cost and
expense) of all books, records, documents and other information concerning the
conduct and results of Auctions, provided that any such agent, accountant or
counsel shall furnish the Auction Agent with a letter from the Fund requesting
that the Auction Agent afford such person access. The Auction Agent shall
maintain records relating to any Auction in accordance with applicable rules and
regulations of the Securities and Exchange Commission (the "Commission") for a
period of at least six years after such Auction, and such records, in reasonable
detail, shall accurately and fairly reflect the actions taken by the Auction
Agent hereunder. The Fund agrees to keep confidential any information regarding
the customers of any Broker-Dealer received from the Auction Agent in connection
with this Agreement or any Auction, and shall not disclose such information or
permit the disclosure of such information without the prior written consent of
the applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.7. The Fund reserves the right to disclose any such information if it is
advised by its counsel that its failure to do so would (i) be unlawful or (ii)
expose it to liability, unless the Broker-Dealer shall have offered
indemnification satisfactory to the Fund. Any such agent, accountant or counsel,
before having access to such information, shall agree to keep such information
confidential and not to disclose such information or permit disclosure of such
information without the prior written consent of the applicable Broker-Dealer,
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provided that such agent, accountant or counsel may reserve the right to
disclose any such information if it is advised by its counsel that its failure
to do so would (i) be unlawful or (ii) expose it to liability, unless the
Broker-Dealer shall have offered indemnification satisfactory to such agent,
accountant or counsel.
2.8 Auction Procedures.
The provisions contained in Section 11.10 of the Second Amended and
Restated Bylaws concerning Auction Procedures will be followed by the Fund and,
to the extent applicable, the Auction Agent, and the provisions contained
therein are incorporated herein by reference in their entirety and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
were set forth fully herein.
III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Trustees of the Fund has adopted resolutions appointing
Deutsche Bank Trust Company Americas as Auction Agent and dividend paying agent
(in such capacity, the "Paying Agent"). The Paying Agent hereby accepts such
appointment and agrees to act in accordance with its standard procedures and the
provisions of the Second Amended and Restated Bylaws which are specified herein
with respect to the Preferred Shares and as set forth in this Section 3.
3.2 The Fund's Notices to the Paying Agent.
Whenever any Preferred Shares are to be redeemed, the Fund shall mail a
Notice of Redemption by first-class mail, postage prepaid, to each Holder of
Preferred Shares being redeemed and to the Paying Agent pursuant to the Second
Amended and Restated Bylaws.
3.3 The Fund to Provide Funds for Dividends and Redemptions.
(a) Not later than 12:00 noon on each Dividend Payment Date, the
Fund shall deposit with the Paying Agent an aggregate amount of Federal Funds or
similar same-day funds equal to the declared dividends to be paid to Holders on
such Dividend Payment Date and shall give the Paying Agent irrevocable
instructions to apply such funds to the payment of such dividends on such
Dividend Payment Date.
(b) If the Fund shall give a Notice of Redemption, then by noon
of the date fixed for redemption, the Fund shall deposit in trust with the
Paying Agent an aggregate amount of Federal Funds or similar same-day funds
sufficient to redeem such Preferred Shares called for redemption and shall give
the Paying Agent irrevocable instructions and authority to pay the redemption
price to the Holders of Preferred Shares called for redemption upon surrender of
the certificate or certificates therefor.
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3.4 Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the Preferred Shares, and (ii)
on any date fixed for redemption, the redemption price of any Preferred Shares
called for redemption. The amount of dividends for any Dividend Period to be
paid by the Paying Agent to Holders will be determined by the Fund as set forth
in Section 11.2 of the Second Amended and Restated Bylaws. The redemption price
to be paid by the Paying Agent to the Holders of any Preferred Shares called for
redemption will be determined as set forth in Section 11.4 of the Second Amended
and Restated Bylaws.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of Share Certificates.
On the Date of Original Issue for any Preferred Share, one certificate
for each series of Preferred Shares shall be issued by the Fund and registered
in the name of Cede & Co., as nominee of the Securities Depository, and
countersigned by the Paying Agent.
4.2 Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, each series of Preferred Shares
shall be registered solely in the name of the Securities Depository or its
nominee. If there is no Securities Depository, at the Fund's option and upon its
receipt of such documents as it deems appropriate, any Preferred Shares may be
registered in the Stock Register in the name of the Beneficial Owner thereof,
and such Beneficial Owner thereupon will be entitled to receive certificates
therefor and required to deliver certificates thereof or upon transfer or
exchange thereof. If the certificate or certificates for Preferred Shares are
not held by the Securities Depository or its nominee, payment will be made in
same-day funds to the Auction Agent against delivery of such certificates.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing Preferred Shares shall be accompanied by
an opinion of counsel stating that such legend may be removed and such shares
may be transferred free of the restriction described in such legend, said
opinion to be delivered under cover of a letter from a Fund Officer authorizing
the Paying Agent to remove the legend on the basis of said opinion.
4.4 Lost, Stolen or Destroyed Share Certificates.
The Paying Agent shall, at the sole expense of the Fund, issue and
register replacement certificates for certificates represented to have been
lost, stolen or destroyed, upon the fulfillment of such requirements as shall be
deemed appropriate by the Fund and by the Paying Agent, subject at all times to
provisions of law, the Second Amended and Restated Bylaws governing such matters
and resolutions adopted by the Fund with respect to lost, stolen or destroyed
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securities. The Paying Agent may, at the sole expense of the Fund, issue new
certificates in exchange for and upon the cancellation of mutilated
certificates. Any request by the Fund to the Paying Agent to issue a replacement
or new certificate pursuant to this Section 4.4 shall be deemed to be a
representation and warranty by the Fund to the Paying Agent that such issuance
will comply with provisions of applicable law and the Second Amended and
Restated Bylaws and resolutions of the Fund.
4.5 Disposition of Canceled Certificates; Record Retention.
The Paying Agent shall retain share certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Commission for at least six
calendar years from the date of such cancellation. The Paying Agent, upon
written request by the Fund, shall afford to the Fund, its agents and counsel
access at reasonable times during normal business hours to review and make
extracts or copies (at the Fund's sole cost and expense) of such certificates
and accompanying documentation. Upon the expiration of this six-year period, the
Paying Agent, upon written request by the Fund, shall deliver to the Fund the
canceled certificates and accompanying documentation. The Paying Agent also
shall undertake to furnish to the Commission, upon demand and after notice to
and authorization by the Fund of such demand, either at its principal office or
at any regional office, complete, correct and current hard copies of any and all
such records. Thereafter, such records shall not be destroyed by the Fund
without the approval of the Paying Agent, which approval shall not be withheld
unreasonably, but will be safely stored for possible future reference.
4.6 Share Register.
The Paying Agent shall maintain the share register, which shall contain
a list of the Holders, the number of shares held by each Holder and the address
of each Holder. The Paying Agent shall record in the share register any change
of address of a Holder upon notice by such Holder. In case of any written
request or demand for the inspection of the share register or any other books of
the Fund in the possession of the Paying Agent, the Paying Agent will notify the
Fund and secure instructions as to permitting or refusing such inspection. The
Paying Agent reserves the right, however, to exhibit the share register or other
records to any person in case it is advised by its counsel that its failure to
do so would be unlawful.
4.7 Return of Funds.
Any funds deposited with the Paying Agent by the Fund for any reason
under this Agreement, including for the payment of dividends or the redemption
of Preferred Shares, that remain with the Paying Agent after 90 days shall be
repaid to the Fund upon written request by the Fund. Such funds, while deposited
with the Auction Agent, will be held in trust for the payment of the applicable
dividend, redemption price or, as may be applicable under the Second Amended and
Restated Bylaws, other charges.
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V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(i) the Fund has been duly organized and is validly
existing as an unincorporated voluntary association under, and by virtue of, the
laws of The Commonwealth of Massachusetts and has full power to execute and
deliver this Agreement and to authorize, create and issue the Preferred Shares;
(ii) the Fund is registered with the Commission under
the 1940 Act as a closed-end, diversified, management investment company;
(iii) this Agreement has been duly and validly
authorized, executed and delivered by the Fund and constitutes the legal, valid
and binding obligation of the Fund, enforceable against the Fund in accordance
with its terms, subject to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equitable principles;
(iv) the form of the certificates evidencing the
Preferred Shares comply with all applicable laws of The Commonwealth of
Massachusetts;
(v) the Preferred Shares have been duly and validly
authorized by the Fund and, upon completion of the initial sale of the Preferred
Shares and receipt of payment therefor, will be validly issued by the Fund,
fully paid and nonassessable;
(vi) at the time of the offering of the Preferred
Shares, the shares offered will be registered under the Securities Act and no
further action by or before any governmental body or authority of the United
States or of any state thereof is required in connection with the execution and
delivery of this Agreement or will be required in connection with the issuance
of the Preferred Shares, except such action as required by applicable state
securities laws;
(vii) the execution and delivery of this Agreement and
the issuance and delivery of the Preferred Shares do not and will not conflict
with, violate or result in a breach of the terms, conditions or provisions of,
or constitute a default under, the Agreement and Declaration of Trust, any order
or decree of any court or public authority having jurisdiction over the Fund or
any mortgage, indenture, contract, agreement or undertaking to which the Fund is
a party or by which it is bound the effect of which conflict, violation, default
or breach would be material to the Fund; and
(viii) no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the Preferred Shares.
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5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Fund that:
(i) The Auction Agent is duly organized and is validly
existing as a banking corporation in good standing under the laws of the State
of New York and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly
authorized, executed and delivered by the Auction Agent and constitutes the
legal, valid and binding obligation of the Auction Agent, enforceable against
the Auction Agent in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.
VI. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any Person except as provided by this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting in accordance with, any communication
authorized by this Agreement and any written instruction, notice, request,
direction, consent, report, certificate, share certificate or other instrument,
paper or document reasonably believed by it to be genuine and appropriately
authorized. The Auction Agent shall not be liable for acting upon any telephone
communication authorized by this Agreement which the Auction Agent reasonably
believes in good faith to have been given by the Fund or by a Broker-Dealer. The
Auction Agent may record telephone communications with the Fund or with the
Broker-Dealers or with both, but agrees not to destroy any such recordings
except in accordance with its usual and customary practices and further to
provide the Fund with a copy of any such recording upon request.
(b) The Auction Agent may consult with outside independent
counsel of its choice, and the written advice of such outside independent
counsel, if addressed to both the Auction Agent and the Fund, shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reasonable reliance thereon.
12
(c) The Auction Agent shall not be required to advance, expend
or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.
6.3 Compensation, Expenses and Indemnification.
(a) The Fund shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Fund and the Auction Agent, subject to adjustments if the
Preferred Shares no longer are held of record by the Securities Depository or
its nominee or if there shall be such other change as shall increase or decrease
materially the Auction Agent's obligations hereunder or under the Broker-Dealer
Agreements.
(b) The Fund shall reimburse the Auction Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Auction Agent in accordance with any provision of this Agreement and of the
Broker-Dealer Agreements (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement or
advance attributable to its negligence or bad faith upon submission to the Fund
of reasonable documentation thereof.
(c) The Fund shall indemnify the Auction Agent for, and hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Auction Agent arising out of or in connection with
its agency under this Agreement and under the Broker-Dealer Agreements,
including the costs and expenses of defending itself against any claim of
liability in connection with its exercise or performance of any of its duties
hereunder and thereunder, except such as may result from its negligence or bad
faith.
VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement at any time by so notifying the Auction Agent. The Auction Agent may
terminate this Agreement upon prior notice to the Fund on the date specified in
such notice, which date shall be no earlier than 60 days after delivery of such
notice.
(b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5.1 and 6.3 hereof shall survive the termination hereof. The
Auction Agent's representations, warranties, covenants and obligations under
Section 6.1 shall survive the termination hereof. Upon termination of this
Agreement, the Auction Agent shall (i) resign as Auction Agent under the
Broker-Dealer Agreements, (ii) at the Fund's request,
13
deliver promptly to the Fund copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the request of the Fund,
transfer promptly to the Fund or to any successor auction agent any funds
deposited by the Fund with the Auction Agent (whether in its capacity as Auction
Agent or as Paying Agent) pursuant to this Agreement which have not been
distributed previously by the Auction Agent in accordance with this Agreement.
7.2 Communications.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:
If to the Fund, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
addressed to: c/o PIMCO Advisory Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Auction Agent, Deutsche Bank Trust Company Americas
addressed to: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Fund by a Fund Officer and on
behalf of the Auction Agent by an Authorized Officer.
7.3 Entire Agreement.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
14
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the respective successors and permitted assigns of each of the
Fund and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party, which consent shall
not be withheld unreasonably.
7.7 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
performed in said state.
7.10 Limitation of Liability.
The Fund's Agreement and Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. This Agreement is
executed on behalf of the Fund by the Fund's officers as officers and not
individually, and the obligations imposed upon the Fund by this Agreement are
not binding upon any of the Fund's Trustees, officers or shareholders
individually but are binding only upon the assets and property of the Fund.
[Signature pages follow]
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
CONVERTIBLE & INCOME FUND
By:_______________________________
Name:
Title:
DEUTSCHE BANK TRUST
COMPANY AMERICAS
By:_______________________________
Name:
Title:
EXHIBIT A
FORM OF BROKER-DEALER AGREEMENT
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CONVERTIBLE & INCOME FUND
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
----------
FORM OF BROKER-DEALER AGREEMENT
dated as of , 2003
Relating to
Auction Preferred Shares
Series A, B, C, D and E
of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CONVERTIBLE & INCOME FUND
----------
[BROKER-DEALER]
BROKER-DEALER AGREEMET
This Broker-Dealer Agreement dated as of _______________, 2003 is
between Deutsche Bank Trust Company Americas, a New York banking corporation
(the "Auction Agent") (not in its individual capacity, but solely as agent of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund (the "Fund"), pursuant to authority
granted to it in the Auction Agency Agreement dated as of _______________, 2003
between the Fund and the Auction Agent (the "Auction Agency Agreement")) and
[Broker-Dealer] (together with its successors and assigns, "BD").
The Fund proposes to issue an aggregate of preferred shares, par value
$0.00001 per share, liquidation preference $25,000 per share, designated as
Auction Preferred Shares, Series A, Auction Preferred Shares, Series B, Auction
Preferred Shares, Series C, Auction Preferred Shares, Series D, and Auction
Preferred Shares, Series E (the "Preferred Shares"), pursuant to the Fund's
Second Amended and Restated Bylaws (as defined below).
As provided in and subject to the Fund's Second Amended and Restated
Bylaws, for each series of Preferred Shares then outstanding, the Applicable
Rate for Preferred Shares for each subsequent Dividend Period shall be equal to
the rate per annum that results from an Auction for Outstanding Preferred Shares
on the respective Auction Date therefor next preceding the period from and after
the Date of Original Issue to and including the last day of the initial Dividend
Period. The Board of Trustees of the Fund has adopted a resolution appointing
Deutsche Bank Trust Company Americas as Auction Agent for purposes of the
Auction Procedures, and pursuant to Section 2.5 of the Auction Agency Agreement,
the Fund has requested and directed the Auction Agent to execute and deliver
this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Terms Defined by Reference to the Second Amended and Restated
Bylaws.
Capitalized terms used herein but not defined herein shall have the
respective meanings specified in the Second Amended and Restated Bylaws.
1.2. Terms Defined Herein.
As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:
(a) "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.
(b) "Auction Procedures" shall mean the procedures for
conducting Auctions that are set forth in Section 11.10 of the Second Amended
and Restated Bylaws.
(c) "Authorized Officer" shall mean each Managing Director, Vice
President, Assistant Vice President and Associate of the Auction Agent and every
other officer or employee of the Auction Agent assigned to its Corporate Trust &
Agency Services and designated as an "Authorized Officer" for purposes of this
Agreement in a communication to BD.
(d) "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.
(e) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
(f) "Second Amended and Restated Bylaws" shall mean the Second
Amended and Restated Bylaws of the Fund in effect at the time the Registration
Statement relating to the Preferred Shares is declared effective by the
Securities and Exchange Commission, specifying the powers, preferences and
rights of the Preferred Shares.
(g) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit A.
1.3. Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience
of reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be
to New York City time.
(e) Sections I and III hereof shall be read in conjunction with
Section 11.10 of Article 11 of the Second Amended and Restated Bylaws and in the
event of any conflict with Section 11.10 of Article 11 of the Second Amended and
Restated Bylaws, then Section 11.10 of Article 11 of the Second Amended and
Restated Bylaws shall take precedence.
II. NOTIFICATION OF DIVIDEND.
The provisions contained in Section 11.2(c)(iii) of the Second Amended
and Restated Bylaws concerning the notification of a Special Dividend Period
will be followed by the Auction Agent and BD, and the provisions contained
therein are incorporated herein by reference in their
-2-
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions were set forth fully herein.
III. THE AUCTION.
3.1. Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures
and the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions were set forth fully herein.
(c) BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 11.1(a) of the Second Amended
and Restated Bylaws may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Fund, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.
3.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone or other
electronic means of communication acceptable to the parties of the Reference
Rate and the Maximum Applicable Rate in effect on such Auction Date.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent has given the notice referred to in paragraph
(a) of the Settlement Procedures, the Auction Agent, by such means as the
Auction Agent reasonably deems practicable, shall give notice of such change to
BD not later than the earlier of 9:15 A.M. on the new Auction Date or 9:15 A.M.
on the old Auction Date. Thereafter, BD promptly shall notify customers of BD
that BD believes are Beneficial Owners of Preferred Shares of such change in the
Auction Date.
(c) The Auction Agent from time to time may request BD to
provide it with a list of the respective customers BD believes are Beneficial
Owners of Preferred Shares. BD shall comply with any such request, and the
Auction Agent shall keep confidential any such information, including
information received as to the identity of Bidders in any Auction, and shall not
disclose any such information so provided to any Person other than the Fund; and
such information shall not be used by the Auction Agent or its officers,
employees, agents or
-3-
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions.
3.3. Auction Schedule; Method of Submission of Orders.
(a) The Fund and the Auction Agent shall normally conduct
Auctions weekly (usually Monday for Series A, Tuesday for Series B, Wednesday
for Series C, Thursday for Series D and Friday for Series E) in accordance with
the schedule set forth below.
Time Event
--------------------------- ----------------------------------------------
By 9:30 A.M. Auction Agent shall advise the Fund and the
Broker-Dealers of the Reference Rate and the
Maximum Rate as set forth in Section 3.2(a)
hereof.
9:30 A.M. - 1:00 P.M. Auction Agent shall assemble information
communicated to it by Broker-Dealers as
provided in Section 11.10(c) of the Second
Amended and Restated Bylaws. Submission
Deadline is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent shall make determinations
pursuant to Section 11.10(d)(i) of the Second
Amended and Restated Bylaws.
By approximately 3:00 P.M. Auction Agent shall advise the Fund of the
results of the Auction as provided in Section
11.10(d)(ii) of the Second Amended and
Restated Bylaws.
Submitted Bids and Submitted Sell Orders will
be accepted and rejected in whole or in part
and Preferred Shares will be allocated as
provided in Section 11.10(e) of the Second
Amended and Restated Bylaws.
Auction Agent shall give notice of the Auction
results as set forth in Section 3.4(a) hereof.
-4-
(b) BD agrees to maintain a list of Potential Beneficial Owners
and to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in 11.10(b)(i) of the Second Amended and
Restated Bylaws.
(c) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit B. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit D, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.
3.4. Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone, facsimile or other electronic means as acceptable to the parties of
the Auction results as set forth in paragraph (a) of the Settlement Procedures.
On the Business Day next succeeding such Auction Date, the Auction Agent shall
notify BD in writing of the disposition of all Orders submitted by BD in the
Auction held on such Auction Date.
(b) BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order as set forth in paragraph (b) of the Settlement Procedures, and take such
other action as is required of BD pursuant to the Settlement Procedures.
If any Beneficial Owner or Existing Holder selling Preferred Shares in
an Auction fails to deliver such shares, the Broker-Dealer of any Person that
was to have purchased Preferred Shares in such Auction may deliver to such
Person a number of whole Preferred Shares that is less than the number of shares
that otherwise was to be purchased by such Person. In such event, the number of
Preferred Shares to be so delivered shall be determined by such Broker-Dealer.
Delivery of such lesser number of shares shall constitute good delivery. Upon
the occurrence of any such failure to deliver shares, such Broker-Dealer shall
deliver to the Auction Agent the notice required by Section 3.3(d)(ii) hereof.
Notwithstanding the foregoing terms of this Section 3.4(b), any delivery or
non-delivery of Preferred Shares which represents any departure from the results
of an Auction, as determined by the Auction Agent, shall be of no effect unless
and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 3.3(d) hereof.
-5-
3.5. Service Charge to be Paid to BD.
Not later than 3:00 P.M. on each Dividend Payment Date, the Auction
Agent after each Auction will pay a service charge from funds provided by the
Fund to BD on the basis of the purchase price of Preferred Shares placed by BD
at such Auction. The service charge shall be (i) in the case of any Auction Date
immediately preceding a 7-Day Dividend Period, the product of (A) a fraction the
numerator of which is the number of days in such Dividend Period (calculated by
counting the first day of such Dividend Period but excluding the last day
thereof) and the denominator of which is 365, times (B) 1/4 of 1%, times (C)
$25,000 times (D) the sum of (I) the aggregate number of Preferred Shares placed
by BD in the applicable Auction that either (x) the subject of a Submitted Bid
of a Beneficial Owner submitted by BD and continued to be held as a result of
such submission or (y) the subject of a Submitted Bid of a Potential Beneficial
Owner submitted by BD and were purchased as a result of such submission plus
(II) the aggregate number of Preferred Shares subject to valid Hold Orders
(determined in accordance with Section 11.10(b) of the Second Amended and
Restated Bylaws) submitted to the Auction Agent by BD plus (III) the number of
Preferred Shares deemed to be subject to Hold Orders by Beneficial Owners
pursuant to Section 11.10(b) of the Second Amended and Restated Bylaws that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (ii) in the case of any Special Dividend Period the amount
determined by mutual consent of the Fund and BD and shall be based upon a
selling concession that would be applicable to an underwriting of fixed or
variable rate preferred shares with a similar final maturity or variable rate
dividend period, respectively, at the commencement of the Dividend Period with
respect to such Auction.
IV. THE AUCTION AGENT.
4.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement.
4.2. Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Fund or by BD.
-6-
The Auction Agent may record telephone communications with the Fund or with BD
or with both.
(b) The Auction Agent may consult with counsel of its own
choice, and the advice of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reasonable reliance thereon.
(c) The Auction Agent shall not be required to advance, expend
or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.
4.3. Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of this Agreement or the Preferred Shares.
V. MISCELLANEOUS.
5.1. Termination.
Any party may terminate this Agreement at any time upon five days'
prior written notice to the other party; provided, however, that if the
Broker-Dealer is [Broker-Dealer], neither [Broker-Dealer] nor the Auction Agent
may terminate this Agreement without first obtaining the prior written consent
of the Fund to such termination, which consent shall not be withheld
unreasonably.
5.2. Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
(a) BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).
(b) BD represents that it (or if BD does not act as Agent
Member, one of its affiliates) shall make all dividend payments on the Preferred
Shares available in same-day funds on each Dividend Payment Date to customers
that use BD (or its affiliate) as Agent Member.
5.3. Agent Member.
At the date hereof, BD is a participant of the Securities Depository.
5.4. Communications.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other
-7-
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given to such party at its address or telecopier
number set forth below:
If to the Auction Agent,
addressed to: Deutsche Bank Trust Company Americas
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the BD,
addressed to:
____________________________________
____________________________________
____________________________________
____________________________________
Telecopier Number: _________________
Telephone Number: __________________
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
5.5. Entire Agreement.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.
5.6. Benefits.
Nothing in this Agreement, express or implied, shall give to any
person, other than the Fund, which is a third-party beneficiary of this
Agreement, the Auction Agent and BD and their respective successors and
permitted assigns, any benefit of any legal or equitable right, remedy or claim
under this Agreement.
5.7. Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged and by the Fund.
(b) Failure of either party to this Agreement to exercise any
right or remedy hereunder in the event of a breach of this Agreement by the
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.
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5.8. Successors and Assigns.
(a) This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the respective successors and permitted assigns of
each of BD and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party; provided,
however, that this Agreement may be assigned by the Auction Agent to a successor
Auction Agent selected by the Fund without the consent of BD.
5.9. Severability.
If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.
5.10. Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
5.11. Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
performed in said state.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
DEUTSCHE BANK TRUST
COMPANY AMERICAS
By:_______________________
Name:
Title:
[BROKER-DEALER]
By:_______________________
Name:
Title:
EXHIBIT A
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings
specified in the Second Amended and Restated Bylaws.
(a) On each Auction Date, the Auction Agent shall notify by telephone
or through the Auction Agent's auction processing system the Broker-Dealers that
participated in the Auction held on such Auction Date and submitted an Order on
behalf of any Beneficial Owner or Potential Beneficial Owner of:
(i) the Applicable Rate fixed for the next succeeding Dividend
Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer")
submitted a Bid or a Sell Order on behalf of a Beneficial Owner, the
number of Preferred Shares, if any, to be sold by such Beneficial
Owner;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Beneficial Owner, the number of
Preferred Shares, if any, to be purchased by such Potential Beneficial
Owner;
(v) if the aggregate number of Preferred Shares to be sold by all
Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid or
a Sell Order exceeds the aggregate number of Preferred Shares to be
purchased by all Potential Beneficial Owners on whose behalf such
Broker-Dealer submitted a Bid, the name or names of one or more Buyer's
Broker-Dealers (and the name of the Agent Member, if any, of each such
Buyer's Broker-Dealer) acting for one or more purchasers of such excess
number of Preferred Shares and the number of such shares to be
purchased from one or more Beneficial Owners on whose behalf such
Broker-Dealer acted by one or more Potential Beneficial Owners on whose
behalf each of such Buyer's Broker-Dealers acted;
(vi) if the aggregate number of Preferred Shares to be purchased
by all Potential Beneficial Owners on whose behalf such Broker-Dealer
submitted a Bid exceeds the aggregate number of Preferred Shares to be
sold by all Beneficial Owners on whose behalf such Broker-Dealer
submitted a Bid or a Sell Order, the name or names of one or more
Seller's Broker-Dealers (and the name of the Agent Member, if any, of
each such Seller's Broker-Dealer) acting for one or more sellers of
such excess number of Preferred Shares and the number of such shares to
be sold to one or more Potential Beneficial Owners on whose behalf such
Broker-Dealer acted by one or more Beneficial Owners on whose behalf
each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with
respect to the Preferred Shares.
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(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Beneficial Owner or Potential Beneficial Owner shall:
(i) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, instruct each Potential Beneficial Owner on whose behalf
such Broker-Dealer submitted a Bid that was accepted, in whole or in
part, to instruct such Potential Beneficial Owner's Agent Member to pay
to such Broker-Dealer (or its Agent Member) through the Securities
Depository the amount necessary to purchase the number of Preferred
Shares to be purchased pursuant to such Bid against receipt of such
shares and advise such Potential Beneficial Owner of the Applicable
Rate for the next succeeding Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Sell Order that was accepted, in whole or in
part, or a Bid that was accepted, in whole or in part, to instruct such
Beneficial Owner's Agent Member to deliver to such Broker-Dealer (or
its Agent Member) through the Securities Depository the number of
Preferred Shares to be sold pursuant to such Order against payment
therefor and advise any such Beneficial Owner that will continue to
hold Preferred Shares of the Applicable Rate for the next succeeding
Dividend Period;
(iii) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Hold Order of the Applicable Rate for the
next succeeding Dividend Period;
(iv) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted an Order of the Auction Date for the next
succeeding Auction; and
(v) advise each Potential Beneficial Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part,
of the Auction Date for the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a
Potential Beneficial Owner or a Beneficial Owner shall, in such manner and at
such time or times as in its sole discretion it may determine, allocate any
funds received by it pursuant to (b)(i) above and any Preferred Shares received
by it pursuant to (b)(ii) above among the Potential Beneficial Owners, if any,
on whose behalf such Broker-Dealer submitted Bids, the Beneficial Owners, if
any, on whose behalf such Broker-Dealer submitted Bids that were accepted or
Sell Orders, and any Broker-Dealer or Broker-Dealers identified to it by the
Auction Agent pursuant to (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Beneficial Owner and Beneficial Owner shall
instruct its Agent Member as provided in (b)(i) or (ii) above, as the
case may be;
(ii) each Seller's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to the Agent Member of the Beneficial
Owner delivering shares to such Broker-Dealer pursuant to (b)(ii) above
the amount necessary to purchase such shares against receipt of
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such shares, and (B) deliver such shares through the Securities
Depository to a Buyer's Broker-Dealer (or its Agent Member) identified
to such Seller's Broker-Dealer pursuant to (a)(v) above against payment
therefor; and
(iii) each Buyer's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to a Seller's Broker-Dealer (or its
Agent Member) identified pursuant to (a)(vi) above the amount necessary
to purchase the shares to be purchased pursuant to (b)(i) above against
receipt of such shares, and (B) deliver such shares through the
Securities Depository to the Agent Member of the purchaser thereof
against payment therefor.
(e) On the day after the Auction Date:
(i) each Bidder's Agent Member referred to in (d)(i) above shall
instruct the Securities Depository to execute the transactions
described in (b)(i) or (ii) above, and the Securities Depository shall
execute such transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d)(ii) above, and the Securities Depository shall execute
such transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d)(iii) above, and the Securities Depository shall
execute such transactions.
(f) If a Beneficial Owner selling Preferred Shares in an Auction fails
to deliver such shares (by authorized book-entry), a Broker-Dealer may deliver
to the Potential Beneficial Owner on behalf of which it submitted a Bid that was
accepted a number of whole Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Potential Beneficial Owner. In
such event, the number of Preferred Shares to be so delivered shall be
determined solely by such Broker-Dealer. Delivery of such lesser number of
shares shall constitute good delivery. Notwithstanding the foregoing terms of
this paragraph (f), any delivery or non-delivery of shares which shall represent
any departure from the results of an Auction, as determined by the Auction
Agent, shall be of no effect unless and until the Auction Agent shall have been
notified of such delivery or non-delivery in accordance with the provisions of
the Auction Agency Agreement and the Broker-Dealer Agreements.
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EXHIBIT B
DEUTSCHE BANK TRUST COMPANY AMERICAS
AUCTION BID FORM
Submit To: Issue:
---------- ------
Deutsche Bank Trust Company Americas ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible
Corporate Trust and Agency Group & Income FundAuction Preferred
Four Albany Street Shares, Series ▇, ▇, ▇, ▇ ▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Preferred Shares")
Attention: Auction Rate Securities
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: ______________________
BENEFICIAL OWNER
Shares now held ___________ HOLD __________________________
BID at rate of ________________
Series ______ SELL __________________________
POTENTIAL BENEFICIAL OWNER
# of shares ___________
BID at rate of __________
Notes:
(1) If submitting more than one Bid for one Bidder, use additional
Auction Bid Forms.
(2) If one or more Bids covering in the aggregate more than the
number of outstanding shares held by any Beneficial Owner are
submitted, such bid shall be considered valid in the order of
priority set forth in the Auction Procedures on the above issue.
(3) A Hold or Sell Order may be placed only by a Beneficial Owner
covering a number of shares not greater than the number of shares
currently held.
(4) Potential Beneficial Owners may make only Bids, each of which
must specify a rate. If more than one Bid is submitted on behalf
of any Potential Beneficial Owner, each Bid submitted shall be a
separate Bid with the rate specified.
(5) Bids may contain no more than three figures to the right of the
decimal point (.001 of 1%). Fractions will not be accepted.
NAME OF BROKER-DEALER ________________________________
Authorized Signature _________________________________
EXHIBIT C
(Note: To be used only for transfers made other than pursuant to an Auction)
TRANSFER FORM
Re: ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
Auction Preferred Shares, Series A, B, C, D and E ("Preferred
Shares")
We are (check one):
[ ] the Existing Holder named below;
[ ] the Broker-Dealer for such Existing Holder; or
[ ] the Agent Member for such Existing Holder.
We hereby notify you that such Beneficial Owner has transferred
________ Series __ Preferred Shares to _______________________________________.
_______________________________
(Name of Existing Holder)
_______________________________
(Name of Broker-Dealer)
_______________________________
(Name of Agent Member)
By:_______________________
Printed Name:
Title:
EXHIBIT D
(NOTE: TO BE USED ONLY FOR FAILURES TO DELIVER OR TO PAY FOR
PREFERRED SHARES SOLD PURSUANT TO AN AUCTION)
NOTICE OF A FAILURE TO DELIVER
We are a Broker-Dealer for ___________________ (the "Purchaser"), which
purchased ________ Series __ Preferred Shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible
& Income Fund in the Auction held on ____________________ from the Seller of
such shares.
We hereby notify you that (check one):
_______ the Seller failed to deliver such shares to the Purchaser.
_______ the Purchaser failed to make payment to the Seller upon delivery of \
such shares.
Name: ________________________
(Name of Broker-Dealer)
By: __________________________
Printed Name:
Title: