EX-99(k)(iii)
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BROKER-DEALER AGREEMENT
between
THE BANK OF NEW YORK
as Auction Agent
and
____________________________
as Broker-Dealer
Dated as of [__]
Relating to
SERIES C AUCTION RATE CUMULATIVE PREFERRED STOCK OF
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
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BROKER-DEALER AGREEMENT dated as of ________ (this "Agreement"), among
(i) The Bank of New York, a New York banking corporation, as auction agent
(the "Auction Agent") (not in its individual capacity but solely as agent)
pursuant to authority granted to it in the Auction Agency Agreement, dated as
of February __, 2003, (the "Auction Agency Agreement") between the The Gabelli
Convertible and Income Securities Fund Inc., (the "Corporation") and the
Auction Agent and (ii) each broker-dealer whose name appears on the signature
page hereof, as broker-dealer (together with its successors and assigns as
such hereinafter referred to as "BD").
The Corporation intends to issue shares of Series C Auction Rate
Cumulative Preferred Stock, par value $0.001 per share, liquidation preference
$25,000 per share (the "Preferred Shares") pursuant to the Corporation's
Articles Supplementary, as defined below. The shares of Preferred Shares shall
be issued in book-entry form through the facilities of the Securities
Depository. References to "Preferred Shares" in this Agreement shall refer
only to the beneficial interests in the Preferred Shares unless the context
otherwise requires.
The Auction Procedures require the participation of a Broker-Dealer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Auction Agent and BD agree as
follows:
1. Definitions and Rules of Construction
1.1 Terms Defined by Articles Supplementary. Capitalized terms not
defined herein shall have the respective meanings specified in the Articles
Supplementary.
1.2 Terms Defined Herein. As used herein and in the Settlement
Procedures, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depositary that will act on behalf of a Bidder.
(b) "Agreement" with respect to the Corporation shall mean this
Agreement as may be amended in writing with written consent of the
Corporation.
(c) "Articles Supplementary" shall mean the Articles
Supplementary Creating and Fixing the Rights of the Series C Auction Rate
Cumulative Preferred Stock, as the same may be amended, supplemented or
modified from time to time.
(d) "Auction" shall have the meaning specified in Section 2.1
hereof.
(e) "Auction Procedures" shall mean the auction procedures
constituting Article II of the form of Articles Supplementary as of the filing
thereof.
(f) "Authorized Officer" of the Auction Agent shall mean each
Vice President, Assistant Vice President and Assistant Treasurer of the
Auction Agent assigned to the Dealing and Trading Group of its Corporate Trust
Department and every other officer or employee of the Auction Agent designated
as an "Authorized Officer" for purposes hereof in a written communication to
the Corporation.
(g) "Corporate Officer" shall mean the Chairman and Chief
Executive Officer, 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 Vice President, each
Assistant Secretary and each Assistant Treasurer of the Corporation and every
other officer or employee of the Corporation designated as a "Corporate
Officer" for purposes hereof in a notice to the Auction Agent.
(h) "Late Charge" has the meaning given in Section 2.7(a).
(i) "Preferred Shares" shall mean the preferred shares, par value
$.001 per share, of the Corporation designated as its "Series C Auction Rate
Cumulative Preferred Stock" and bearing such further designation as to series
as the Board of Directors, as the case may be, of the Corporation or any
committee thereof shall specify.
(j) "Settlement Procedures" shall mean the Settlement Procedures
attached to the Auction Agency Agreement as Exhibit B.
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) Section 1 and 2 hereof shall be read in conjunction with the
Articles Supplementary and in the event of any conflict with the Articles
Supplementary, the Articles Supplementary shall take precedence.
1.4 Warranties of BD. BD hereby represents and warrants as follows.
(a) This Broker-Dealer Agreement has been duly authorized,
executed and delivered by BD and that, assuming the due authorization,
execution and delivery hereof by the Auction Agent, this Broker-Dealer
Agreement constitutes a valid and binding agreement of BD, enforceable against
it in accordance with its terms. BD's representations and warranties in this
Section 1.4 shall survive the termination of this Agreement.
(b) BD has policies and procedures in place that are reasonably
designed to comply with its obligations under the provisions of the USA
Patriot Act, the Bank Secrecy Act ("BSA") and any other anti-money laundering
law, rule or regulation applicable to broker dealers under the BSA, or
otherwise.
2. The Auctions
2.1 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 the next Dividend
Period. Each periodic implementation 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 fully set forth 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 13 of Part
I of the Articles Supplementary may execute a Broker-Dealer Agreement and
participate as Broker-Dealers in Auctions.
(d) BD acknowledges and agrees that each provision of the Auction
Procedures that requires BD to perform an obligation or procedure is hereby
incorporated herein by reference and that this Agreement shall constitute the
Corporation's instruction, and BD hereby agrees, to perform such obligations
and procedures without further request by or instructions from the
Corporation.
(e) BD may participate in Auctions for its own account if it is
not an affiliate of the Corporation, unless the Corporation notifies all
Broker-Dealers that they may no longer do so, in which case BD may continue to
submit Hold Orders or Sell Orders for its own account. If BD is an affiliate
of the Corporation, it may participate in Auctions, but not for its own
account. The Auction Agent shall have no duty to monitor whether or not the BD
has complied with the provisions of this Section 2.1(e).
2.2 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, and shall promptly confirm such advice in writing, of (i)
the Maximum Rate and (ii) when applicable, the Reference Rate.
(b) BD shall cause the Maximum Rate to be communicated as
promptly as practicable to its customers who hold or may be interested in
acquiring Preferred Shares.
(c) As promptly as practicable after determining each Auction
Date, but not later than 9:15 a.m. on the Business Day preceding such Auction
Date, the Auction Agent shall notify BD, by such means as the Auction Agent
deems practicable, of the scheduled date of such Auction Date. If the Auction
Date for any Auction shall be changed after the Auction Agent has given such
notice or the notice referred to in clause (vii) of paragraph (a) of the
Settlement Procedures, the Auction Agent, by such means as the Auction Agent
deems practicable, shall give notice of such change to BD not later than the
earlier of (x) 9:15 a.m. on the new Auction Date, and (y) 9:15 a.m. on the
original Auction Date. Thereafter, BD shall promptly notify customers of BD
that are Existing Holders of such change in the Auction Date.
(d) If required by applicable law, or requested by the Auction
Agent, BD shall provide a list of Existing Holders based upon inquiries of
those Persons such Broker-Dealer believes are Beneficial Owners as a result of
the most recent Auction to the Auction Agent promptly after any date so
requested by the Auction Agent. 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 other parties hereto, provided that the Auction Agent
reserves the right to disclose any such information if (a) it is ordered to do
so by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (b) it is advised by its counsel that its failure to do so would
be unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity
satisfactory to it.
(e) BD agrees to maintain a list of customers relating to the
Preferred Shares and to use its best efforts, subject to existing laws and
regulations, to contact the customers on such list whom BD believes may be
interested in participating in the Auction on each Auction Date, as a
Potential Holder, for the purposes set forth in the Auction Procedures.
Nothing herein shall require BD to submit an Order for any customer in any
Auction.
(f) The Auction Agent's registry of Existing Holders of Preferred
Shares shall be conclusive and binding on BD. BD may inquire of the Auction
Agent between 3:00 p.m. on the Business Day preceding an Auction for Preferred
Shares and 9:30 a.m. on the Auction Date for such Auction to ascertain the
number of Preferred Shares in respect of which the Auction Agent has
determined BD to be an Existing Holder. If BD believes it is the Existing
Holder of fewer Preferred Shares than specified by the Auction Agent in
response to BD's inquiry, BD may so inform the Auction Agent of that belief.
BD shall not, in its capacity as Existing Holder of Preferred Shares, submit
Orders in such Auction in respect of Preferred Shares covering in the
aggregate more than the number of Preferred Shares specified by the Auction
Agent in response to BD's inquiry.
2.3 Auction Schedule; Method of Submission of Orders.
(a) The Auction Agent shall conduct Auctions in accordance with
the schedule set forth below. Such schedule may be changed at any time by the
Auction Agent with the consent of the Corporation, which consent shall not be
unreasonably withheld. The Auction Agent shall give written notice of any such
change to BD which shall have the right to review such change. Such notice
shall be received prior to the close of business on the Business Day
immediately preceding 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 advises the
Corporation and the
Broker-Dealer of (i) the
applicable Maximum Rate and
(ii) when applicable, the
Reference Rate or the
Treasury Index Rate as set
forth in Section 2.2(a)
hereof.
9:30 a.m. - 1:00 p.m. Auction Agent assembles
information communicated to
it by Broker-Dealer as
provided in Section 2(a) of
the Auction Procedures.
Submission Deadline is 1:00
p.m.
Not earlier than Auction Agent makes
1:00 p.m. determinations pursuant to
4(a) of the Auction Procedures.
By approximately Auction Agent advises the
3:30 p.m. Corporation of results of
Auction as provided in
Section 4(b) of the Auction
Procedures. Submitted Bids
and Submitted Sell Orders
are accepted and rejected in
whole or in part and Preferred
Shares are allocated as provided
in Section 5 of the Auction
Procedures. Auction Agent gives
notice of Auction results as set
forth in paragraph (a) of the
Settlement Procedures.
(b) BD may designate one or more individuals in its organization
who will coordinate its procedures in connection with Auctions and purchases
and sales of Preferred Shares.
(c) BD agrees to handle its customers' orders in accordance with
its duties under applicable securities laws and rules.
(d) To the extent that pursuant to Section 5 of the Auction
Procedures of the Corporation, BD continues to hold, sell or purchase a number
of shares that is fewer than the number of shares in an Order submitted by BD
to the Auction Agent in which BD designated itself as an Existing Holder or
Potential Holder in respect of customer Orders, BD shall make appropriate pro
rata allocations among its customers for which it submitted Orders of similar
tenor. If as a result of such allocations, any Existing Holder would be
entitled or required to sell, or any Existing Holder would be entitled or
required to purchase, a fraction of a Preferred Share on any Auction Date, BD
shall, in such manner as it shall determine in its sole discretion, round up
or down the number of Preferred Shares to be purchased or sold on such Auction
Date by any Existing Holder or Potential Holder on whose behalf BD submitted
an Order so that the number of shares so purchased or sold by each such
Existing Holder or Potential Holder on such Auction Date shall be whole
shares.
(e) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A prior to 1:00 p.m. on each
Auction Date. BD shall submit separate Orders to the Auction Agent for each
Potential Holder or Existing Holder on whose behalf BD is submitting an Order
and shall not net or aggregate the Orders of Potential Holders or Existing
Holders on whose behalf BD is submitting Orders. Any Order submitted by BD to
the Auction Agent prior to the Submission Deadline on any Auction Date shall
be irrevocable.
(f) BD shall deliver to the Auction Agent a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares made through BD by an Existing Holder to another Person other
than pursuant to an Auction and a written notice, substantially in the form
attached hereto as Exhibit C, of the failure of any 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 immediately preceding the applicable Auction Date.
2.4 Notices.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone or facsimile (or other electronic means acceptable to both parties)
of the results of the Auction as set forth in paragraph (a) of the Settlement
Procedures. By approximately 11:30 a.m. on the Business Day immediately
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 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.
2.5 Designation of Special Dividend Period.
(a) If the Corporation delivers to its Auction Agent a notice of
the Auction Date for the Preferred Shares of the Corporation for a Dividend
Period thereof that next succeeds a Special Dividend Period, the Auction Agent
shall deliver such notice to BD as promptly as practicable after its receipt
of such notice from the Corporation.
(b) If the Board of Directors of the Corporation proposes to
designate any Dividend Period as a Special Dividend Period and the Corporation
delivers to its Auction Agent a notice of such proposed Special Dividend
Period in the form of Exhibit C to the Auction Agency Agreement, such Auction
Agent shall deliver such notice to BD as promptly as practicable after its
receipt of such notice from the Corporation.
(c) If the Board of Directors of the Corporation determines to
designate such Dividend Period as a Special Dividend Period, and the
Corporation delivers to its Auction Agent a notice of such Special Dividend
Period in the form of Exhibit D to the Auction Agency Agreement not later than
3:00 p.m. on the second Business Day next preceding the first day of such
Dividend Period, such Auction Agent shall deliver such notice to BD promptly
after being notified by the Corporation on such second Business Day.
(d) If the Corporation shall deliver to its Auction Agent a
notice not later than 3:00 p.m. on the second Business Day next preceding the
first day of a proposed Special Dividend Period stating that the Corporation
has determined not to exercise its option to designate such Dividend Period as
a Special Dividend Period, in the form of Exhibit E to the Auction Agency
Agreement, or shall fail to timely deliver either such notice or a notice in
the form of Exhibit D to the Auction Agency Agreement, such Auction Agent
shall deliver a notice in the form of Exhibit E to the Auction Agency
Agreement to BD promptly after being notified by the Corporation on such
second Business Day.
2.6 Intentionally Omitted.
2.7 Default.
(a) If: (i) any Default shall have occurred with respect to
Preferred Shares of the Corporation during any Dividend Period thereof, but,
prior to 12:00 noon, New York City time, on the third Business Day next
succeeding the date on which such Default occurred, such Default shall have
been cured in accordance with Section 2.8 of the Auction Agency Agreement and
the Corporation shall have paid to the Auction Agent the late charge (the
"Late Charge") as described in Section 2.8 of the Auction Agency Agreement,
then such Auction Agent shall deliver a notice in the form of Exhibit F to the
Auction Agency Agreement by first-class mail, postage prepaid, to BD not later
than one Business Day after its receipt of the payment from the Corporation
curing such Default and such Late Charge[; provided, however that no delivery
of notice in the form of Exhibit F shall be required if, prior to one Business
Day after its receipt of the payment from the Corporation, the Auction Agent
has otherwise informed BD of its receipt of payment from the Corporation.]
(b) If any Default shall have occurred with respect to Preferred
Shares of the Corporation during any Dividend Period thereof, and, prior to
12:00 noon, New York City time, on the third Business Day next succeeding the
date on which such Default occurred, such Default shall not have been cured as
described in Section 2.8 of the Auction Agency Agreement or the Corporation
shall not have paid to the Auction Agent the applicable Late Charge described
in Section 2.8 of the Auction Agency Agreement; then such Auction Agent shall
deliver a notice in the form of Exhibit G to the Auction Agency Agreement to
the Broker-Dealers not later than one Business Day after the receipt of the
payment from the Corporation curing such Default and Late Charge.
2.8 Service Charge to Be Paid to BD.
(a) No later than 12:00 noon on each Dividend Payment Date, the
Auction Agent after each Auction will pay a service charge from funds provided
by the Corporation 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 Dividend Period of less than 365 days,
the product of (A) a fraction, the numerator of which is the number of days in
such Dividend Period and the denominator of which is 365, times (B) 1/4 of 1%,
times (C) $25,000 times (D) the aggregate number of Preferred Shares placed by
such Broker-Dealer at such Auction and (ii) in the case of any Dividend Period
of 365 days or more, the amount determined by mutual consent of the
Corporation and any such 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. For the purpose of this Section 2.8(a), Preferred Shares will
be considered "placed" by a Broker-Dealer if such shares were (I) the subject
of Hold Orders deemed to have been submitted to the Auction Agent by the
Broker-Dealer and were acquired by such Broker-Dealer for its customers who
are Beneficial Owners or (II) the subject of an order submitted by such
Broker-Dealer that is (A) a Submitted Bid of an Existing Holder that resulted
in such Existing Holder continuing to hold such shares as a result of the
Auction, (B) a Submitted Bid of a Potential Holder that resulted in such
Potential Holder purchasing such shares as a result of the Auction or (C) a
valid Hold Order.
(b) If the Corporation determines to change the rate at which the
Broker-Dealer Fee accrues, the Corporation shall mail to the Auction Agent a
notice thereof within two Business Days of such change. Any change in the
Broker-Dealer fee rate shall be effective on the Auction Date next succeeding
the Auction Agent's receipt of notice of such change.
2.9 Settlement.
(a) If any Existing Holder selling Preferred Shares in an Auction
fails to deliver such Preferred Shares (by authorized book-entry), the BD of
any Person that was to have purchased Preferred Shares in such Auction may
deliver to such Person a number of Preferred Shares that is less than the
number of Preferred Shares that otherwise were to be purchased by such Person.
In such event, the number of Preferred Shares to be so delivered shall be
determined by BD. Delivery of such lesser number of Preferred Shares shall
constitute good delivery. Upon the occurrence of any such failure to deliver
Preferred Shares, BD shall deliver to the Auction Agent the notice required by
Section 2.3(f) hereof. Notwithstanding the foregoing provisions of this
Section 2.9(a), 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 2.3(f) hereof. The Auction Agent shall have no duty or
liability with respect to enforcement of this Section 2.9(a).
(b) Neither the Auction Agent nor the Corporation shall have any
responsibility or liability with respect to the failure of an Existing Holder,
a Potential Holder or an Agent Member or any of them to deliver Preferred
Shares or to pay for Preferred Shares sold or purchased pursuant to the
Auction Procedures or otherwise.
(c) Notwithstanding any provision of the Auction Procedures or
the Settlement Procedures to the contrary, in the event BD is an Existing
Holder with respect to Preferred Shares and the Auction Procedures provide
that BD shall be deemed to have submitted a Sell Order in an Auction with
respect to such shares if BD fails to submit an Order in that Auction with
respect to such shares, BD shall have no liability to any Person for failing
to sell such shares pursuant to such a deemed Sell Order if (i) such shares
were transferred by the beneficial owner thereof without notification of such
transfer in compliance with the Auction Procedures or (ii) BD has indicated to
the Auction Agent pursuant to Section 2.2(f) of this Agreement that, according
to BD's records, BD is not the Existing Holder of such shares.
(d) Notwithstanding any provision of the Auction Procedures or
the Settlement Procedures to the contrary, in the event an Existing Holder of
Preferred Shares with respect to whom a Broker-Dealer submitted a Bid to the
Auction Agent for such shares that was accepted in whole or in part, or
submitted or is deemed to have submitted a Sell Order for such shares that was
accepted in whole or in part, fails to instruct its Agent Member to deliver
such shares against payment therefore, partial deliveries of Preferred Shares
that have been made in respect of Potential Holders' Submitted Bids for
Preferred Shares that have been accepted in whole or in part shall constitute
good delivery to such Potential Holders.
3. The Auction Agent
3.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the
Corporation hereunder and owes no duties, fiduciary or otherwise, to any
Person other than by reason of the Auction Agency Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement and the Auction
Agency Agreement, and no implied covenants or obligations shall be read into
this Agreement, the Auction Agency Agreement, Auction Procedures or the
Settlement Procedures against the Auction Agent.
(c) In the absence of gross negligence or willful misconduct on
its part, the Auction Agent shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by it in the
performance of its duties under the Agreement. The Auction Agent shall not be
liable for any error of judgment resulting from the use or reliance on a
source of information used in good faith unless the Auction Agent shall have
been grossly negligent in the determination, calculation or declaration
thereunder. The Auction Agent shall not be liable for any error of judgment
made in good faith unless the Auction Agent shall have been grossly negligent
in ascertaining (or failing to ascertain) the pertinent facts.
(d) The Auction Agent shall not be: (i) required to, and does
not, make any representations or have any responsibilities as to the validity,
accuracy, value or genuineness of any signatures or endorsements, other than
its own; (ii) obligated to take any legal action hereunder that might, in its
judgment, involve any expense or liability, unless it has been furnished with
indemnity satisfactory to the Auction Agent; and (iii) responsible for or
liable in any respect on account of the identity, trust or rights of any
Person (other than itself and its agents and attorneys) executing or
delivering or purporting to execute or deliver any document under this
Agreement or any Broker-Dealer Agreement.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control; it being understood that the Auction Agent shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely and shall be fully
protected in acting or refraining from acting upon any communication
authorized by this Agreement and upon any written instruction, notice,
request, direction, consent, report, certificate, share certificate or other
instrument, paper or document believed by it to be genuine. The Auction Agent
shall not be liable for acting upon any communication authorized by this
Agreement (including, but not limited to, any made by telephone, telecopier or
other means of electronic communication acceptable to the parties hereto)
which the Auction Agent believes in good faith to have been given by the
Corporation or by BD. The Auction Agent may record telephone communications
with BD.
(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 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 and
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed by it with due care.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, it being understood that the Auction Agent shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.
(f) The Auction Agent shall in no event be responsible or liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit), even if the Auction Agent has
been advised of the likelihood of such loss or damage and regardless of the
form of action.
3.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to, and shall have no liability with respect to, the
correctness of the recitals in, or the validity, adequacy or accuracy of, this
Agreement, the Auction Agency Agreement, the Auction Procedures, the offering
material used in connection with the offer and sale of the Preferred Shares or
any other agreement or instrument executed in connection with the transactions
contemplated herein or in any thereof.
4. Duties and Responsibilities of BD
(a) BD undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement, the Auction Agency Agreement or
Settlement Procedures against BD.
(b) In the absence of gross negligence or willful misconduct on
its part, BD shall not be liable for any action taken, suffered, or omitted or
for any error of judgment made by it in the performance of its duties under
this Agreement. BD shall not be liable for any error of judgment resulting
from the use or reliance on a source of information used in good faith and
without gross negligence to make any determination, calculation or declaration
hereunder. BD shall not be liable for any error of judgment made in good faith
unless BD shall have been grossly negligent in ascertaining or failing to
ascertain the pertinent facts.
(c) BD shall not be: (i) required to, and does not, make any
representations or have any responsibilities as to the validity, accuracy,
value or genuineness of any signatures or endorsements, other than its own;
(ii) obligated to take any legal action hereunder that might, in its judgment,
involve any expense or liability, unless it has been furnished with indemnity
satisfactory to BD; and (iii) responsible for or liable in any respect on
account of the identity, trust or rights of any Person (other than itself and
its agents and attorneys) executing or delivering or purporting to execute or
deliver any document under this Agreement or any Broker-Dealer Agreement.
(d) BD shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires;
floods; wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities, Internet or communications
services; acts of civil or military authority; or governmental actions; it
being understood that BD shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.
5. Miscellaneous
5.1 Termination. (a) Any party may terminate this Agreement at any
time upon five (5) days written notice to the other parties, which notice may
be given by facsimile as provided in Section 5.3 hereof. This Agreement shall
automatically terminate upon the redemption of all outstanding Preferred
Shares or upon termination of the Auction Agency Agreement.
(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 affiliate as Agent Member.
5.2 Agent Member. BD is, and shall remain for the term of this
Agreement, a member of, or participant in, the Securities Depository (or an
affiliate of such a member or participant).
5.3 Communications. Except for (i) communications authorized to be 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 communications to
any party hereunder shall be in writing (for the purposes of this Agreement,
telecopy or other means of electronic communication acceptable to the parties
shall be deemed to be in writing) and shall be given to such party, addressed
to it, at its address, telecopy number set forth below and, where appropriate
reference the particular Auction to which such notice relates:
If to BD, __________________________
addressed: __________________________
__________________________
__________________________
Attention:__________________
Telephone No.: _____________
Facsimile No.: ______________
If to the Auction The Bank of New York
Agent, addressed: 000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group - Auction Desk
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
If to the The Gabelli Convertible and Income
Corporation, Securities Fund Inc.
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 914-921-5100
or such other address or facsimile number as such party may hereafter specify
for such purpose by notice to the other parties. 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, on
behalf of the Auction Agent by an Authorized Officer and on behalf of the
Corporation by a Corporate Officer. Telephone communications may be recorded.
5.4 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 inferred, between the parties relating to the subject matter
hereof.
5.5 Benefits. Nothing in this Agreement, express or implied, shall
give to any person, other than the Auction Agent, the Corporation and BD and
their respective successors and permitted assigns, any benefit of any legal or
equitable right, remedy or claim under this Agreement.
5.6 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of each of
the parties hereto.
(b) Failure of any party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by any other
party shall not constitute a waiver of any such right or remedy with respect
to any subsequent breach.
5.7 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 parties hereto. This Agreement may not be
assigned by any party hereto absent the prior written consent of the other
parties.
5.8 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.
5.9 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.
5.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF NEW YORK). THE PARTIES AGREE THAT ALL
ACTIONS AND PROCEEDINGS ARISING OUT OF THIS BROKER-DEALER AGREEMENT OR ANY
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS LOCATED IN THE
BOROUGH OF MANHATTAN, CITY OF NEW YORK, STATE OF NEW YORK. EACH PARTY WAIVES
ANY OBJECTION THAT IT MAY HAVE THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
THE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK AND STATE OF
NEW YORK WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME. EACH OF THE PARTIES HERETO ALSO IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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.
THE BANK OF NEW YORK
as Auction Agent
By:______________________________
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
_________________________________
as Broker-Dealer
By:______________________________
Name:
Title:
[Broker-Dealer Agreement]
Exhibit A
To BROKER-DEALER
AGREEMENT
AUCTION BID FORM
(Submit only one Order on this Order Form) THE
GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
To: The Bank of New York Date of Auction
000 Xxxxxx Xxxxxx, 0xx Xxxxx ______________
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group -
Auction Desk
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: __________________________________
Bidder placed the Order listed below covering the number of shares
indicated (complete only one blank):
_________________ number of Preferred Shares now held by
Bidder (an Existing Holder), and the Order is a (check one):
|_| Hold Order; or
|_| Bid at a rate of ____%; or
|_| Sell Order;
-- or -
_________________ number of Preferred Shares not now held
by Bidder (a Potential Holder), and the Order is
a Bid at a rate of ______%
Notes:
(1) If submitting more than one Bid for one Bidder, use additional Order
Forms.
(2) If one or more Bids covering in the aggregate more than the outstanding
number of Preferred Shares held by any Existing Holder are submitted,
such Bids shall be considered valid in the order of priority set forth
in the Auction Procedures.
(3) A Hold or Sell Order may be placed only by an Existing Holder covering a
number of Preferred Shares not greater than the number of Preferred
Shares currently held by such Existing Holder.
(4) Potential Holders may make Bids only, each of which must specify a rate.
If more than one Bid is submitted on behalf of any Potential Holder,
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%).
(6) An Order must be submitted in whole Preferred Shares with an aggregate
liquidation preference of $25,000.
Name of Broker-Dealer: __________________________
By: _________________________________
Exhibit B
To BROKER-DEALER
AGREEMENT
(To be used only for transfers made other than
pursuant to an Auction)
TRANSFER FORM
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
We are (check one):
|_| the Existing Holder named below; or
|_| the Broker-Dealer for such Existing Holder; or
|_| the Agent Member for such Existing Holder.
We hereby notify you that such Existing Holder will transfer ___
Preferred Shares to ____________________.
| GABELLI CONVERTIBLE AND
| INCOME SECURITIES FUND INC.
----------------------------|--------------------------------
| By:
| ---------------------------
| Name:
| Title:
|
----------------------------|--------------------------------
| (Name of Existing Holder)
----------------------------|--------------------------------
| (Name of Broker-Dealer)
----------------------------|--------------------------------
| (Name of Agent Member)
----------------------------|--------------------------------
| By:
| ---------------------------
| Name:
| Title:
Exhibit C
To BROKER-DEALER
AGREEMENT
(To be used only for failures to deliver
Preferred Shares sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
Complete either I. or II.
I. We are a Broker-Dealer for ______________ (the "Purchaser"), which
purchased ____ Preferred Shares in the Auction held on
__________________ from the seller of such Preferred Shares.
II. We are a Broker-Dealer for _____________ (the "Seller"), which sold
____ Preferred Shares in the Auction held on ____________________
to the purchaser of such Preferred Shares.
We hereby notify you that (check one):
__________the Seller failed to deliver such Preferred Shares to the
Purchaser; or
__________ the Purchaser failed to make payment to the Seller upon
delivery of such Preferred Shares.
| Name:
| -----------------------------
| (Name of Broker-Dealer)
|
|
|
--------------------------------|------------------------------------
| By:
| -------------------------------
| Printed Name:
| Title:
Capitalized terms used in this letter, unless otherwise defined herein,
shall have the meanings set forth in the Articles Supplementary Creating and
Fixing the Rights of the Series C Auction Rate Cumulative Preferred Stock, as
the same may be amended, supplemented or modified from time to time.
(Name of Purchaser)
By: ___________________________
Name:
Title:
Address: ______________________
_______________________________
_______________________________
Dated:
